India: Ecommerce Companies Require Registration For GST In All States

Last Updated: 27 September 2018
Article by S.S. Rana & Co. Advocates

 The setting up of ecommerce platforms has facilitated the provision of goods and services at the click of a button. The supply of goods and services creates an event taxable under the Goods and Services Tax (hereinafter referred to as "GST") laws. The unified taxation systems help to eradicate the cascading effect and create a transparent system avoiding tax evasion.

Tax obligations for E-commerce players

The Government has made the following provisions of the Act effective from October 1, 2018, vide notifications dated September 13, 2018, with the aim to prevent tax evasion:

  • Tax Deducted at Source (hereinafter referred to as "TDS")1 at the rate of 1% from the payment made or credited to the supplier of taxable goods or services or both, where the total value of such supply, under a contract, exceeds INR 250,000 (USD 3475 approx.). [Section 51(1) of the Central GST Act, 2017].
  • Tax Collected at Source (hereinafter referred to as "TCS")2 at such rate not exceeding 1%, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. [Section 52 of the Central GST Act, 2017].

Compliance burden on Ecommerce platforms

The Government on September 18, 2018, vide meeting between the Ecommerce sector and Central Board of Indirect Taxes & Customs, clarified that such corporates would be required to register themselves for GST in all States.3

The E-commerce players are being confronted with the challenge that the effective date for TDS and TCS collection is approaching soon and registration in all States would be an expensive affair.

However, no TCS liability would accrue in respect of the Ecommerce entities based outside India.

With the increased compliance burden of multiple registrations for GST, the foreign E-commerce business houses have pitched in for a single central registration process in order to reduce the compliance hurdles for them. This would enable the industry to abide by the rules and obligations laid down under the GST laws without undergoing time-consuming and cumbersome procedures of numerous registrations.

Footnotes

1 http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-50-central-taxenglish.pdf;jsessionid=FEC1C65919B5780202FF96754F5D81D8

2 http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-51-central-tax-englishnew.pdf;jsessionid=950ABD219843739605C124F564F43B6C

3 https://economictimes.indiatimes.com/industry/services/retail/foreign-ecommerce-companies-rush-to-register-for-gst-in-allstates/articleshow/65877830.cms

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 4012 3000). Our website can be accessed at www.ssrana.in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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