The implementation of GST is excepted to usher in a uniform tax regime and bring some clarity to indirect taxation in the E-commerce sector. Further, GST would replace all the indirect taxes levied on goods and services by the Central and State governments with single nationwide sales tax. It is aimed at being a comprehensive for most goods and services.

E-commerce is one of the fast growing sectors, which has received special attention in as much as special provisions have been devoted to E-commerce companies, which seems to depart from the current position as well as appear to be exception to the general principle underlying GST via, Tax on consumption.

Further, as said by the Finance Minister Mr Arun Jaitley, “the GST could add up to 2% to the growth of Asia’s third largest economy”.

Impact on E-Commerce

Currently, the federal indirect tax structure with different regimes in various states has led to confusion and uncertainty on the tax treatment of online marketplace and aggregators. It is felt that having clear and defined laws will help remove the ambiguity that currently exists in this sector, and insulate such operators from ad hoc laws and arbitrary levies imposed by State governments.

The Model GST Law may result in higher compliances challenges for the e-commerce sectors and other issues that would require further clarity and certainty.

Who are covered?

The following provisions under the Model GST law for E-commerce merit consideration is enumerated here below:-

• Persons who supplies goods and/or services, other than branded services, through e-commerce operators, as also every e-commerce operator, will be mandatorily required to obtain registration irrespective of the threshold limit.
• The Model GST law defines the term “Electronic Commerce Operator” to include any person who directly or indirectly owns, operates, manages an electronic platform that is engaged in facilitating the supply of goods and/or services or in providing any information or any other services incidental to or in connection therewith.

• The Model GST law defines the term “Aggregator” is also a person who maintains or operates an electronic platform for facilitating supply of services. The only distinction between an aggregator and other e-commerce operators is that an aggregator provides underlying services under his brand. Consequently, an aggregator would also be required to adhere to the process of tax collection at source and other requisite compliance.
• An electronic commerce operator will be required to collect tax at prescribed rates from the amount payable or paid by the supplier, towards the supply of goods and/or services made through the said operator, and pay the said tax of the credit of the appropriate Government within 10 days after the end of the month in which such collection is made. The amount of tax so collected and paid by the electronic commerce operator will be deemed to be a payment of tax on behalf of the concerned supplier, and the supplier will claim credit of the same in his electronic cash ledger.

• The E-commerce operator would furnish a statement electronically, containing all prescribed particulars of amounts collected towards outward supplies of goods and/or services effected by the said operator, within 10 days after the end of such calendar month.

Who is not covered?

Online retailers who supply goods/services on their own behalf are not covered under the definition of e-commerce operator and therefore the process of tax collection at source and other requisite compliances in GST will not be applicable.

The provision of Model GST Law E-commerce, are set to mark a departure from the current law and mark the beginning of new Model of GST Law While GST is excepted to carry on a lot of positives by ending the confusion surrounding the levy of GST on e-commerce transactions, and subsuming various Taxes.

It is to be noted that e-commerce companies sell across all states in India dealing with thousands of vendors. GST, being a consumer-based taxation regime, GST is to paid in the State where the goods or services are consumed. This will be lead to huge complexities in record keeping, accounting and compliance cost.

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