Background of Electronic Commerce :
Electronic commerce is growing at a fast pace. Amazon, Flipkart, Uber etc. are doing e-commerce business in big scale.
This is a new challenge to tax authorities.
In e-commerce, order for supply of goods or services is placed through portal. The e-commerce companies pass on these orders to actual suppliers of goods and services. Supply of goods are services is done by third party unknown to the person placing order.
So far, e-commerce companies were not liable to pay Vat or CST as they were not selling goods. Recently, the services provided through portal were brought under service tax net.
Now, e-commerce companies selling goods on portal are being made liable to collect 1% GST at source.
This 1% TCS (Tax Collected at Source) seems to be mainly for control purposes, as balance GST will be paid by the actual supplier of goods or services.
The actual supplier can take credit of this TCS paid by e-commerce operator.
In case of supply of specified services, the e-commerce operator will be liable to pay entire IGST/CGST/SGST on such services- section 5(5) of IGST Act and section 9(5) of CGST Act.
‘Electronic commerce’ means supply of goods or services or both including digital products over digital or electronic network – section 2(44) of CGST Act.
‘Electronic commerce operator’ means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce – section 2(45) of CGST Act.