GST

Understanding GST and Its Impact on E-commerce

Goods and Services Tax (GST) has revolutionized the Indian tax system, and e-commerce businesses are no exception. This indirect tax regime has brought significant changes to the way online businesses operate and file taxes.

Is GST Mandatory for E-commerce Businesses?

Yes, GST is mandatory for all e-commerce businesses operating in India, irrespective of their turnover.

Key Points to Consider:

1. Registration:
   • E-commerce businesses must obtain GST registration under the GST Act.
   • The registration process involves obtaining a unique GSTIN (Goods and Services Tax Identification Number).
2. Tax Liability:
   • E-commerce businesses are liable to charge GST on the supply of goods and services.
   • The applicable GST rate varies depending on the nature of the product or service.
3. Tax Collection at Source (TCS):
   • E-commerce marketplaces are required to collect TCS from sellers.
   • The TCS amount is deposited with the government and adjusted against the seller’s GST liability.
4. Input Tax Credit (ITC):
   • E-commerce businesses can claim ITC on GST paid on inputs and input services used in their business operations.
5. Returns Filing:
   • E-commerce businesses must file regular GST returns, including GSTR-1, GSTR-3B, and GSTR-9.
   • Timely filing of returns is crucial to avoid penalties and interest.

Benefits of GST for E-commerce Businesses:

• Simplified Tax Structure: GST has streamlined the complex tax system, reducing compliance costs.
• Uniform Tax Rates: A uniform tax rate across the country has led to increased efficiency and reduced tax disputes.
• Input Tax Credit: The availability of ITC helps businesses reduce their overall tax burden.
• Increased Transparency: GST has improved transparency in the tax system, making it easier for businesses to comply with tax laws.

Conclusion:

GST has had a significant impact on the e-commerce industry in India. By understanding the key provisions and complying with GST regulations, e-commerce businesses can ensure smooth operations and optimize their tax liabilities.

With the surge in litigation surrounding the incorrect availment of Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime, it’s imperative for GST registered buyers to adhere to certain guidelines. This article outlines essential pointers that buyers must keep in mind while availing ITC to ensure compliance and mitigate the risk of disputes and penalties.

Possession of a tax invoice or debit note:
Buyer must have possession of tax invoice and debit note. Further please note that tax invoice or debit note should have the valid field as specified in Rule 46 and Rule 53 of i. e Name, GST No, Place of supply, HSN, GST rate, invoice no not exceeding 16 digit and many more. ITC of IGST paid on import of goods cab be claimed as ITC basis Bill of entry.

ITC should be available in GSTR 2B:
Details has been furnished by supplier in GSTR 1 and same should be available in GSTR 2B of buyer.

Received of good and services:
Buyer must have received the good and services. If the goods are received in instalments, ITC can be availed when last lots or instalment is received.

Payment of tax by supplier:
Tax has been actually paid by supplier and GSTR 3B has also been furnished by supplier.

Input tax credit should not be restricted u/s 38:
ITC should not available basis various scenario as specified in section 38 of CGST Act i.e. continuous default in payment of tax by supplier, tax shown by supplier in GSTR 1 is more that tax paid in GSTR 3B etc. supplier has availed the excess ITC etc.

Payment to supplier within 180 days:
Payment to supplier should be made within180 days from the date of invoice. If payment is not made within 180 days, ITC shouldbe reversed along with interest. However, ITC can be re-availed once the payment tosupplier is made. Further, please note that there is no-time limit for re-availment of ITConce payment is made to supplier.

Due date for Availment of ITC:
Time limit to avail the ITC against invoice or debit note should be earlier of 30
November of next financial year or due date of filing the Annual return for that financial year. No ITC can be claimed beyond aforesaid dates.

Depreciation on GST portion:
No ITC will be allowed if depreciation is claimed on GST component of capital good purchased.

Blocked credit:
There are certain items that are not eligible for availment the ITC u/s17(5) of CGST Act i.e. staff welfare expenses, rent a cab services, health insurance ofemployee, membership of health & fitness center, tax has been paid under composition scheme etc.