The proposed Goods and Services Tax is the largest indirect tax reform in India. It is expected to bring simpler tax structure. Online marketplaces form the backbone of the burgeoning e-commerce sector in India. This sector is expected to grow in the near future and have a far reaching impact in the country. The single tax across India will simplify the current tax complications of online marketplaces. The purpose of this post is to give a headsup of how GST will change the way business is done by e-commerce companies.
Current VAT and Service Tax Scenario for e-commerce companies
How to move from VAT and Service Tax to GST
- If you are registered with VAT and have a valid PAN, you will automatically be migrated to GST
- A Provisional Certificate of Registration will be issued in GST REG-21
- You have to submit and apply for Registration by submitting REG-20 Form within 6 months
- After submission, you will be issued a Final Registration Certificate in REG-06
- Registration may be required to be obtained in states where the assessee has a place of business and from where the goods/services are supplied. Hence, where the assessee has a place of business in four states from where services are provided throughout India, registration may be required in all four states
- The concept of centralised registration in the current service tax regime may not exist and hence, e-commerce companies may be required to register multiple times
What are the types of GST which will be imposed?
|Nature of Levy||Levyable on||Adjusted against|
|Central GST||Local supply of Goods and Services||CGST and IGST|
|State GST||Local supply of Goods and Services||SGST and IGST|
|Integrated GST||Interstate supply and Imports||Against all|
Which is the best GST Software to use for e-commerce companies?
As all the Tax Filings will have to be done electronically, its important to choose your accounting software wisely.
Tally is the old fashioned legacy software of India. Though its widely used, It has disadvantages of not being on the cloud and compromises security. If you are considering a GST software, It will be wise to move to a Cloud based Accounting System which has the capabilities to manage a e-commerce company
Reach is the only Online Accounting Software with GST Capabilities and ability to give you features specific to supermarkets. It can further sync transactions directly from your front-end website like Shopify, Kartrocket or Magento. Alternatively, you can also sync your website to our backend using a free Rest API. To get a quick demo of our product, you can Visit www.reachaccountant.com
What are the Changes to the Customer Bill under GST?
Rules for the Bill to be issued under GST
The following details should be displayed in the Tax Invoice
- The Tax Invoice should have unique serial numbers (number or Alpha numeric)
- The State Name and State Code Should be mentioned
- GST Identification Number should be displayed
- HSN Code for the product/ service needs to be mentioned
- Taxable value after deducting discount should be displayed
- The State GST, Central GST and Integrated GST should be shown seperately
What Returns have to be filed under GST by e-commerce companies?
- 10th of every month, you will declare your sales in GSTR-1
- Between 11th – 15th, Your purchase (inward supply) will get auto-populated and you are allowed to make corrections in GSTR-2A
- On 20th, the auto-populated GSTR-3 will be available for filing and payment
|S.No||GSTR Return||For||Due date||To be filed by|
|1||GSTR – 1||Sales (Outward supply)||10th||All|
|2||GSTR-2||Purchase (Inward supply)||15th||All|
|4||GSTR-4||Quarterly return||18th of subsequent quarter||Compounding Tax payers|
|5||GSTR-5||Periodic return for NRI||Last day of registration||NRI|
|6||GSTR-6||Return for ISD||15th|
|7||GSTR-7||Return for TDS||10th|
|8||GSTR-8||Annual Return||31st Dec||All|
What will happen to the balance of input tax credit pending currently?
You are allowed to carry forward the balance CENVAT credit (provided it is allowed as input under GST). To avail the credit, make sure the last filed VAT returns denotes the available credit.
Is it possible to get refunds of Input Credit?
Refunds will be available in following cases:
- Excess payment of tax due to a mistake or inadvertence
- Export (including deemed export) of goods/services. No exemption on inputs/input services will be provided and the same will be required to be claimed as a refund.
- Finalisation of provisional assessment
- Refund of pre-deposit, including refund arising in pursuance of an appellate authority”™s order
- Payment of duty/tax during investigation but less liability arises at the time of finalisation of investigation/ adjudication
- Refund of tax payment on purchases made by UN bodies, supplies to canteen stores department (CSD) canteens, paramilitary forces canteens, etc.
- Tax credit on inputs used for manufacturing/generation/ production/creation of tax-free supplies or non-GST supplies
- Refund of carry-forward input tax credit: ITC accumulated due to inverted duty structure will be refunded.
- Refund on account of year-end or volume-based incentives provided by the supplier through credit notes: Application to be filed along with certification and input tax credit at the buyer”™s end and output liability at the supplier”™s end to get reduced simultaneously; important for e-commerce entities for year-end as well as volume discounts
- Tax refund for international tourists
The following key points have been mentioned for the refund process:
- Focus of the refund process is to grant refunds with the least possible submission of documents and ensure easy process
- Refund application to be submitted online in the prescribed format within one year from the prescribed relevant date along with other supporting documents
- CA certificate required if refund exceeds specified limit (in other cases, self-certification will be sufficient)
- Option to file refund application either on the GSTN portal or through respective state/central tax portals
- Preliminary scrutiny of refund applications to be carried out within 30 working days
- Refund to be paid by the government electronically through NEFT/RTGS/ECS
- For refund in excess of specified amounts, pre-audit of refund application has to be carried out
- Recommended rates of interest: For delayed payment of refund @ 6% and for default in payment of GST @ 18%
- Interest on refund to be payable from the last date when refund should have been sanctioned
- GST law may provide for adjustments of refund claims with outstanding tax demands