GST registration is mandatory for all ecommerce businesses in India, regardless of their revenue threshold. The eCommerce sector has expanded rapidly in today’s technological era These days, every big or small organization has the opportunity to sell their produce in the international market through the internet. But with this trend comes other legalities, which demands recognition inclusive of GST registration. It is therefore important for any form of eCommerce business to fully understand whether or not it is required to be registered under GST to avoid any form of legal trouble and above all, to fully understand the need to be on the right side of the law before indulging into sales and or business with the customer. At The Legal Dost, we’re here to help make this process as smooth as possible and make sure your business is GST compliant.
What is GST?
As we all know, GST or Goods and Services Tax System merges all the other indirect taxes in India like Value Added Taxing or VAT, Service Tax, and even Excise Duty. It is paid on the sale of goods and services being sold in India. The GST is expected to provide for a smooth structure for taxation across the states hence help the business entities in the way they operate.
Why is GST compulsory for eCommerce businesses?
Legal Compliance: Currently, GST registration is mandatory for tech-enabled businesses whose turnover crosses a specific or certain limit during online selling. One outcome of failure to register is that it can attract penalties, fines and at some point legal consequences.
Interstate Sales: That means the eCommerce business entails the supply of products or services to other states requires you to register for GST. It helps you to conduct interstate sale and collect the correct tax to meet the requirement of the GST laws.
Input Tax Credit (ITC): Registered dealers are accorded the option of Input Tax Credit whereby you can be refunded on the tax charged on acquired goods for business use. This is especially helpful to the business that engage in the buying and selling of merchandise on their site most often.
Credibility: GST registration makes your business acceptable in the eyes of its suppliers, customers, and partners. It gives indication that your business is accredited and in compliance with the legal provisions.
Avoiding Penalties: Breaches of GST laws are punishable by fines, interest on the unpaid amount of tax and sometimes the suspension of the business. GST registration assist you in overcoming such finance hitches.
GST registration for eCommerce – Who needs it?
In general, eCommerce businesses that meet the following criteria must obtain GST registration:
Turnover Exceeds the Threshold Limit: The GST registration limit is ₹40 lakhs for goods (₹20 lakhs in specially deemed states) and ₹20 lakhs for services in an e-commerce business.
Suppliers of Goods or Services: In a case you are involved in sale of taxable products or services, registration is compulsory.
Online Marketplaces: For businesses that are running an online marketplace, it is mandatory to register for GST in order to deal with TCS.
Business in Multiple States: In case you are an interstate business, the GST will need to be registered by each individual state since GST is a state tax.
Documents Required for GST Registration for eCommerce Business
PAN Card of the Proprietor or Company’s Director: The PAN Card serves as the tax identity for the proprietor or company’s director, detailing their financial transactions.
Memorandum of Association (MOA): This is the document of incorporation for the company, outlining the scope of its business and its relationship with the outside world.
Articles of Association (AOA): The internal rules and regulations that govern the company’s operations and management.
PAN Card of the Authorised Signatory: Used to track the authorised signatory’s tax-related activities.
Aadhar Card of the Authorised Signatory: Confirms the identity of the authorised signatory and serves as their taxpayer identification.
TCS Details: Information related to Tax Collected at Source (TCS) must be provided.
Certificate of Incorporation: The Ministry of Corporate Affairs granted a certificate of incorporation to establish the company as a separate entity.
PAN Card of the Company: Maintains a record of the company’s tax-related transactions.
Steps for GST Registration for eCommerce Business
Step 1: Access the GST Portal
Visit the official GST website
Navigate to Services > Registration > New Registration.
Step 2: Start the New Registration Process
The new registration form will appear. Select ‘ Taxpayer ‘ under the dropdown menu for ‘I am a’.
Fill in the required details, such as the legal name of the business, location of the business, email ID, PAN and mobile number.
Enter the captcha code and click on ‘Proceed’.
Step 3: Verification via OTP
An OTP will be sent to both the email address and provider mobile number. Enter these OTPs and click on ‘Proceed’.
This completes Part A of FORM GST REG-01 of the registration process.
Step 4: Temporary Reference Number (TRN)
To complete the Part A, a Temporary Reference Number (TRN) will be generated. Click on ‘Proceed’.
Enter your TRN and the captcha code, then click on ‘Proceed’.
Verify the OTP again and click on ‘Proceed’.
Step 5: Complete Your Profile
Your saved application will appear with an expiry date of around 15 days. Click on ‘Action’.
Complete your profile by filling out the ten sections on the portal:
Business Details
Partners/Promoter
Authorized Signatory
Authorized Representative
Principal Place of Business
Additional Places of Business
Goods and Services
State Specific Information
Aadhaar Authentication
Verification
Select the name of the authorized signatory from the dropdown list under ‘Name of Authorized Signatory’.
In the Place field, enter the place where the form was filed (e.g., Chandigarh, Delhi).
Step 6: Digital Signature and Submission
The application must be digitally signed using a Digital Signature Certificate (DSC), e-sign (OTP is sent to the Aadhaar-registered mobile number), or an e-verification code (EVC) (OTP is sent to the registered mobile number).
After successful submission, a message indicating application success will be displayed.
Step 7: Track Application Status
You will receive a confirmation on your registered mobile number and email ID inculde the Application Reference Number (ARN).
Track the application status under ‘Track Application Status’ on the GST portal.
Step 8: Receive Your GSTIN
The registration process normally takes about 6 (six) days, After that, you will be assigned a 15-digit Goods and Services Taxpayer Identification Number (GSTIN) and will receive your registration certificate in Form GST REG-06.
GST Filing for eCommerce Businesses
After registering the eCommerce business, they need to be Half-Yearly/Quarterly/Familiarity Returns that depend on the type of business under GST. There are different types of GST returns:
GSTR-1: Information regarding outward supplies which are also referred to as sales.
GSTR-3B: Statement of total tax provision and tax outflow.
GSTR-9: Annual return.
Others, like GSTR-8 (whereby the taxes are collected at the source) for eCommerce companies selling through marketplace platforms must also be filed.
Conclusion
The idea of getting registered under GST is not just mandatory for the e-Commerce businesses but also very much beneficial and tactical to establish a good image and have efficient working along with reduced tax burdens. This paper has demystified the process and the benefits that come with undertaking GST registration to enable the e-Commerce businesses to appreciate the importance of the taxation process to propel their businesses forward. Excited by the prospects of the GST registration, the Legal Dost is here to assist you in the process of the registration of GST. If you want to register with GST and follow a proper guideline, many consultants are available online, such as The Legal Dost
GST Registration for eCommerce (FAQ’s)
Yes, it is mandatory for all the eCommerce players having their turnover above Rs. 40 lakhs in case of goods (Rs. 20 lakhs in case of services considering the special category states). They are also required by organizations that undertake cross-border selling or those who sell their products through online platforms.
TCS mean the taxes which are collected by the e-commerce companies such as Amazon or Flipkart on sellers behalf. They subtract a percentage (it is 1% at the moment) from the seller’s payment in the form of TCS and then pay it to the government.
Yes, GST registered can claim ITC for the tax paid for the purchase of goods and services which are used for their business activities.
Yes, GST registration is compulsory for exporters of goods as well as service providers with taxable turnover above Rs. Five lakh. However, export is treated under GST as zero rated supply, that is to say that no GST is levied on export supplies and one can obtain refund on the input GST.
No, GST is state-specific. If your eCommerce business is located in one or multiple states, then you need to get multiple GST registration for those multiple states.
For failure, the tax amount payable is 10 percent of the amount of tax that is due or Rs. 10,000 whichever is bigger. If one continues not to adhere to the law, then the penalties that are imposed on him or her increase or worse, there might be legal consequences.
The primary documents include:
- PAN card of the business.
- Proof of business address (rental agreement, utility bill).
- Bank account statement or canceled cheque.
- Passport-sized photographs of the proprietor or authorized signatory.
ECommerce businesses typically file the following returns:
- GSTR-1: Outward supplies (sales).
- GSTR-3B: Monthly summary return.
- GSTR-8: For Tax Collected at Source (TCS) by eCommerce operators.
- GSTR-9: Annual return.
Different kinds of digital services attract different GST rates. For instance, software in the form of a service (SaaS) attracts an 18% GST. Make sure you get the categorisation of your digital services right.
The Legal Dost offers end to end GST services right from registration to filing returns, claiming ITC, compliance management for eCommerce companies. As for our professionals, they help you streamline the process while keeping you GST-compliant.