Analysis of section 8: GST on e commerce business

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As per section 2(41) of revised GST model law electronic commerce means supply of goods and/or services including digital products over digital or electronic network. This means all kind of supplies which completed over digital network is covered under GST regime. This may include transaction done digital network on prepayment basis such as flipkart, first-try etc.

Under GST regime e commerce operator is classified under two head:

  1. E commerce operator as an taxable entity
  2. E commerce operator as on tax collection entity

Here, we will discuss e commerce operator as a taxable entity only.

E commerce operator as taxable entity:

Central government or state government, as the case may be, may specify categories of services under this class. If such services are provided by e commerce operator by digital means, whether on its own account or as an agent of other supplier, it is always presumed that same are supplied by e commerce operator.
Now the consequences of e commerce operator supplying such specified services are below:

  1. The turnover of such supplies shall be included in the turnover of e-commerce operator and not in the turnover of the actual supplier.
  2. E commerce operator is liable to pay tax on such supplies.
  3. No threshold limit is specified for such e commerce business. Such e commerce supplier has to obtain GST registration for every rupee of transaction.
  4. E commerce business has to apply for registration in each of the state where it affects its supplies.
  5. The original supplier, who supplies the services to e commerce operator, shall apply for registration in case his aggregate turnover exceeds Rs 25 lacs.

 
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