Complete guide on GST registration for E commerce sellers

gst registration for e commerce seller

GST Registration for E-Commerce sellers is a complex area that requires to be discussed separately due to the complexity of understanding the applicability of GST registration.

Registration requirements are discussed separately for a supplier of goods and supplier of services, in case a person supplies goods as well as services then the dealer will be considered as a supplier of goods for the purpose of threshold limit and interstate supplies.

Compulsory GST registration for suppliers of Goods through e-commerce operators.

Any person who supplies goods through an e-commerce operator is liable to apply for compulsory GST registration, irrespective of the threshold limit.

Compulsory application for GST registration is required to be applied U/s 24 where there is no threshold limit, therefore every supplier who intends to supply their goods through an e-commerce operator shall obtain a GST registration number.

Exemption from compulsory registration for suppliers of goods through e-commerce operators.

With effect from 1st October 2023 vide GST notification 34/2023 dated 31st July 2023, persons supplying goods through e-commerce operators are not required to apply for a GST registration certificate if they qualify for threshold exemption with the following conditions.

  • Interstate supply of goods is not allowed, so the sale of goods through an e-commerce operator is allowed only to a person located within the state.
  • Can supply goods only from one state, cannot opt to sell from more than one state even though the value of supplies is less than the threshold limit.
  • PAN number is mandatory to avail the benefit of the exemption
  • The enrolment number should be applied in the GST common portal at GST enrolment for unregistered dealers. 
  • Details such as place of business, and state of supply.
  • The enrollment application should be successfully validated.

In view of the above conditions to claim exemption from compulsory GST registration, the following points are worth noting.

  • Where Goods are required to be supplied from more than one state, compulsory registration is applicable
  • Similarly, where goods are required to be supplied to more than one state, GST registration is required to be applied.
  • The place of business can be in one state and the place of supply can be in another state, the only condition is one state is allowed in either case as per the notification.
  • Enrollment in the GST portal is mandatory, even though GST application is not mandatory.
  • An enhanced threshold limit of Rs.40,00,000 is not applicable for a person supplying goods through an e-commerce operator.
  • Therefore, as soon as the threshold limit of Rs.20,00,000 is reached registration should be applied.

GST registration for suppliers of services through e-commerce operators.

  • GST registration is mandatory for suppliers of services only if turnover exceeds the threshold limit of Rs.20,00,000 for the dealers having a place of business in Tamil Nadu.
  • GST registration is not required for E-Commerce suppliers of services covered under section 9(5).
  • Right now 4 services are listed under section 9(5) such as cab services, housekeeping services (e.g. carpenter, plumber), restaurant services, and accommodation services.
  • There is no restriction on inter-supply of services.
  • In case the supply of services is covered U/s 9(5), an invoice will be issued by the e-commerce operator irrespective of the fact whether the supplier is registered or unregistered.
  • In case the supplier of service is not covered in Section 9(5) an invoice will be issued by the supplier of services.
  • Supply of services can be made from more than one state, which means the person can have a place of business in more than one state. For example, a dealer who supplies services from Chennai can provide services to a person located all over India, and they are not required to apply for GST registration in Chennai even though the supply of services is interstate.
  • The composition scheme is not applicable to suppliers of services through an e-commerce portal.

Issues faced by dealers selling goods through e-commerce operators.

  • Portals like Amazon and Flipkart charge their sales commission and other charges, it is advised to calculate the net proceeds properly to avoid losses.
  • There is a myth that GST registration is not required for persons selling goods through e-commerce portals, Once the threshold limit is crossed GST registration is mandatory irrespective of payment of GST by the E-commerce operator.
  • Invoicing, credit notes, and other GST-related documents are processed by the e-commerce portal, dealers should note that they are only making your work easy, and GST returns should be filed declaring the sales and purchases for the month.
  • The accounting and calculations used by the e-commerce operators are too complex to be understood by the dealers, so it is recommended to get the service of a GST consultant.
  • In case the business is discontinued, it is mandatory to apply for cancellation of GST registration to avoid penalties and late fees in the future.
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