E-commerce has now grown drastically in India, as many users have started selling and buying items online based on internet connection and smartphones. The latest regulatory framework for intra-state e-commerce has highlighted appropriate rules for Amazon and other e-commerce portals with its sellers.
Place of Supply for Intrastate E-commerce Transactions
Place of supply has a prime role in intrastate e-commerce transactions as well. The Indian government and other taxation authorities charge GST for goods and services at the place of used or consumed goods instead of their origin. The Indian state, where the goods or services are consumed may collect Goods and Services tax.
Indeed, e-commerce transactions place of supply concept is crucial, as every GST provision revolves across it. In other words, where you are supplying or selling goods does not matter in the GST provisions. Instead, the destination of the transported goods is relevant and is a point of concern for applying GST rules.
The same rule applies to every e-commerce platform, including the ones selling on Amazon. Accordingly, the combination of CGST and SGST is applicable in the case of intrastate e-commerce transactions of goods.
You may understand the provisions related to supply place for e-commerce goods and related intra-state e-commerce guidelines based on the following table-
|Supply of Goods
|Shipping Address/Billing Address
|Place of Supply
|The seller supplies any e-commerce goods to the buyer
|Both shipping and billing addresses are the same
|The place where the buyer receives the goods
|Seller sends any e-commerce good to any other individual/third-party
|The shipping address and billing address are different
|The billing address will be the supply place (GST authorities assume that the buyer has collected the goods and the supply place of the respective goods will be the buyer’s location only)
Additional Aspects to Impact GST for E-commerce Businesses
Besides place of supply, GST and related regulatory framework for intra-state e-commerce depend on a few additional factors, which include the following-
Whether you check Amazon or any other online sales platform, you will find many products sold over the internet. The diversity in e-commerce goods and services also leads to a huge variation in the GST rates. In most cases, GST rates are within different slabs of 28%, 18%, 12%, and 5%. Hence, e-commerce buyers and sellers should classify their products smartly to apply the accurate GST rate.
Time of Goods’ Supply
The time of e-commerce goods supply determines the right time of your GST liability. It is essential for your compliance deadlines and regular cash flows.
Also Read: How Does GST Affect E-Commerce?
GST Rules for E-commerce Sellers and Buyers
The GST rates, place of supply, and time of supply are the legal aspects of intra-state e-commerce supply. However, you should also learn the necessary GST registration-related rules for sellers and buyers.
The E-commerce seller registration process is mandatory for every seller if his turnover exceeds the prescribed threshold limit. Registering under Goods and Services Tax is not only a legal requirement but also it allows sellers to recover the GST paid on different inputs as Input Tax Credits. The process contains different steps, which include the following-
- Obtaining a Digital Signature Certificate and PAN Card
- Filing an online application form on the official GST website
- Submission of the mandatory documents
On the other hand, buyers must stay aware of their GST rights and obligations. Buyers should create their invoices appropriately and may claim for ITC if they also possess GST registrations. Moreover, buyers should know the GST included in the price of their purchased products and services.
Invoicing Requirements in E-commerce Intrastate Supply
Appropriate invoice is a crucial aspect of compliance in intra-state e-commerce. Whether you are a buyer or a seller, your invoice must highlight every relevant detail, including the supply. Furthermore, you must adhere to e-invoicing rules if they are applicable. Never forget to generate QR and IRN codes to create your B2B invoices.
Table to Highlight the Invoice Compliance in Intra-state E-commerce Transactions
|Place of Supply Determination
|Identify the exact location, where suppliers deliver the goods to buyers or where the goods are received
|Appropriate GST Categories
|Application of both CGST and SGST in the case of intra-state transactions
|Invoice-wise Records Maintenance
|Maintains detailed records of every transaction, which includes the details of sellers and buyers, product description, its quantity, price, and the charged GST
|Monthly GST Return Filings
|Filing of GST returns per month to include details about outward sales/supplies done via e-commerce platforms
|Tax Collected at the Source
|Every e-commerce operator should collect TCS on taxable supplies’ net value done through its platform via different suppliers
|TCS Report in GST monthly return
|Every e-commerce operator should highlight the report on TCS collected in their GST returns per month and deposit the same with the Indian government
|Contents of GST-compliant tax invoices
|Generated tax invoices must comply with the updated GST requirements, which are GSTINs of the seller and the buyer, SAC/HSN codes, GST amount, and taxable value
|E-invoicing or online invoicing
|Businesses should generate an electronic invoice with its unique Invoice Reference Number
Other Guidelines to Complete GST Registration and GST Filing with Ease
E-commerce businesses should be diligent when they complete their GST registrations. If your business operations go on across state lines in the case of digital marketplace, you should complete your GST registration in every state. GST calculation on an e-commerce sale needs detailed attention and a deep understanding of different tax slabs with exemptions. For this, you must follow a simple and easy guide as follows-
- Identify the GST rate for every item you sell
- Determine the supply place for the goods and services separately
- Calculate the components of intrastate GST or the combination of CGST and SGST accurately
- Provide a GST-compliant invoice to your customers by filling in every detail, like the tax amount, SAC/HSN codes, and GSTIN.
The process associated with filing GST is somewhat overwhelming. However, you may ease your burden by adopting a methodological and consistent approach. The steps to follow include the following-
- Collect each of the GST-compliant purchases and sales invoices
- Reconcile your sales and purchase invoices with the GST returns submitted by the suppliers
- File both quarterly and monthly GST returns whatever is applicable within the mentioned due dates to prevent any penalty
Every e-commerce business must understand the concept/type of applicable GST, the place of supply, and other legal aspects of intra-state e-commerce supply. Such knowledge and awareness ensure that businesses abide by the law, simplify their taxation process, and contribute to a smooth online market. As online shopping grows continuously, staying compliant and well-versed with the mandatory regulations becomes crucial for long-term and ongoing business success.
Frequently Asked Questions
What are the legal components of an e-commerce GST?
The legal components of an e-commerce GST involve applying the most appropriate GST rate and determining the supply place. Also, the GST compliance consists of maintaining the transaction records in detail.
What refers to e-commerce supply places as per GST terms?
An e-commerce supply place refers to the delivery location of transported goods in any online transaction. The location thus determines the type of transaction, which may be intrastate or inter-state.
How GST can be determined or calculated in an intrastate e-commerce transaction of goods?
Like regular transactions, GST calculation in e-commerce sales is according to intrastate or interstate transactions. Accordingly, the combination of CGST and SGST is applicable in intrastate transactions of goods.
Whether places of supply and delivery locations different in an online sale?
In most cases, delivery location and place of supply are the same. However, billing addresses may vary in drop shipping cases. Nevertheless, GST authorities of India consider the delivery address as the supply place.