Understanding Rules and rates of GST in E-commerce

With the help of this blog, you would be able to understand the crucial details on the deduction of TCS (tax collected at source), TDS (tax deducted at source), and GST (goods and services tax). But first, it is essential to carry out the GST registration process in India. This can be done online with the required documents. It is also mandatory to file a GST return in India if your business's turnover goes beyond the threshold limit stated in the GST law.

Now, let's go through the process of GST registration in India for E-commerce operators and the forms needed by taxpayers who want to collect/deduct TCS/TDS.

Who is authorised to collect TCS (tax collected at source) under the GST?

E-commerce aggregators are obliged under the GST (goods and services tax) law for accumulating and depositing tax at the rate of one per cent from each transaction. Any trader or dealer selling goods and services online will get the payment once the one per cent tax is deducted.

All the dealers and traders selling goods and services online would require to get registered under the GST (goods and services tax) regime even though their turnover is not more than Rs. 20 Lacs to claim the tax deduction by aggregators. To keep in mind, those service suppliers who are not supplying via E-commerce operator liable to collect tax at source and whose turnover is not more than Rs. 20 Lacs are exempted from getting the registration done under the GST.

Who is authorised to deduct TDS (tax deducted at source) under the GST (goods and services tax)?

TDS is going to be deducted at the rate of one per cent on the payments made at the suppliers of taxable goods and services, where the value of supply (in totality) under personal contract is more than Rs. 250000 Lacs.

The following entities or people require to deduct TDS (tax deducted at source);

1.An establishment or department of the state or central government.

2.Local authorities.

3.Government agencies.

4. A. a board or authority or any other such bodies.

-Brought into place by an act of parliament or state legislature or,

-Set up by any government with the participation of 51% or more by way of equity or control.

B. The society set up by the state government or central government, or any other local authority.

C. PSUs (public sector undertakings) are sanctioned in the latest notification dated 13th of September, 2018.

 

Registration.

Any person who is needed to deduct TDS (tax deducted at source) or collect TCS (tax collected at source) would file an application for registration electronically, duly verified or signed by Electronic verification code (EVC), with the help of form GST REG-07 on the official portal; either directly or from a facilitation centre authorised by the commissioner.

The sanctioned officer would grant registration once the verification is done and allocate a certificate of registration in form GST REG-06 within the three working days from the actual date of applying.

Cancellation of registration.

If the authorised person examines and finds out via a proceeding that a person is no longer liable to collect TCS (tax collected at source) or deduct TDS (tax deducted at source), then the officer would revoke the registration and not be able to file GST return online. The cancellation has to be conversed to the said person in form GST REG-08 electronically and won1.

The designated officer will follow the same process for cancellation as for ordinary taxpayers.

Registration for people who are supplying information online from outside of India.

What does it mean by OIDAR (online information and database access or retrieval service)?

Simply, OIDAR (online information and database access or retrieval service) means services whose delivery is moderated by the internet. The supply is evidently automated, requiring the minimum human intervention and impractical without the information technology.

This would be applicable to whom?

Here are a few examples of electronic services from the service tax list that would be taken as OIDAR;

-Advertisements on the internet.

-Offering cloud service such as google drive.

-Provision of movies, e-books, music, software and other intangibles through the internet such as Amazon Prime Video and Netflix.

-Offering information or data, recoverable or otherwise, to any person electronically via a computer network.

-Online gaming and streaming.

-Web-based services offering financial and legal data, trade stats, social networking sites, matrimonial services and so forth.

 

Some non-OIDAR services.

  • Supplying goods, where processing and ordering are conducted electronically.
  • Supplying physical newspapers, books, or journals.
  • Services offered by lawyers and financial consultants to clients via email.
  • Booking tickets or services to entertainment events, car hire and accommodation.
  • Professional and educational courses, where the content is offered by a teacher over the internet.
  • Offline repair services of computer parts.
  • Repairing of hardware, software over the internet from a remote location.
  • Advertisements on posters, newspapers and TV.
  • Internet access services and internet backbone services such as GTPL broadband.

It has also been stated that using the internet solely to converse or facilitate the outcome of service requirements does not mean that a business is offering OIDAR services. Registration for OIDAR from a place outside the country to a non-taxable online recipient can be done with form GST REG-10.
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