GST and E-commerce | Good and Service Tax

We shall in this tutorial try to understand the impact of GST also known as Good and Service Taxon E-Commerce.

the conception of an online market place has lead to uprising of Electronic Commerce in India.

Under the GST or Good and Service Tax Law – Marketplace is an e-commerce platform owned by the E-commerce Operator. Let us now look into some of the features of a marketplace model

  • Enables third-party sellers to register and sell online on their platform.
  • Charges a subscription fees/ commission on sale value from listed sellers.
  • Third-party sellers under this model gain access to a larger customer base, registered with marketplace.
  • Customer on the other hand gain access to multiple sellers and competitive prices for desired products.
  • Items purchased on such marketplaces are either shipped by Merchant/Third-party seller directly or through the fulfillment center managed by Marketplace Operator.

Foreign Direct Investments under such model has been permitted to promote e-commerce marketplace business model in India. Good and Service Tax has majorly covered the e-commerce segment recently. For the first time, government has taken initiative to regulate the online business, which has largely been unregulated.

Let us discuss

Section 56. Collection of tax at source

Notwithstanding anything to the contrary contained in the Act, every electronic commerce operator (hereinafter referred to in this section as the “operator”), not being an agent, shall collect an amount calculated at the rate of one percent of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator.

For the purposes of this sub-section, the expression “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services, other than services notified under sub-section (4) of section 8, made during any month by all registered taxable persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.


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