E-Commerce Operator under GST – Complete Guide with Practical Example

 📦 E-Commerce Operator under GST – Complete Guide with Practical Example

As the digital economy burgeons in India, very drastically, there seems to be a major change in the modus operandi of business organizations. Of course, one of the major changes comes through the rise of e-commerce platforms which connect buyers and sellers across the internet. Accordingly, the GST laws have introduced a set of rules and compliance requirements relevant to these platforms, identified as E-commerce Operators (ECOs). Whatever you do, small shop on Amazon or big platform on your own like delivery app, it’s worth knowing what your role is in respect of the GST law.

 In this article, we explain:

• What defines an E-commerce Operator under GST
• Registration and compliance obligations
• TCS collection process
• ECO liability in specific services
• A practical example for better understanding

✅ What is an E-Commerce Operator under GST?

As per Section 2(45) of the CGST Act, 2017, an E-commerce Operator (ECO) is any person who owns, operates, or manages a digital or electronic platform for e-commerce. This includes websites, mobile apps, or any other digital interface that facilitates the sale of goods or services.

Examples of popular ECOs in India include Amazon, Flipkart, Zomato, Swiggy, Ola, Uber, MakeMyTrip, and others. These platforms may not necessarily own the products or directly offer services. Instead, they provide a digital marketplace where independent sellers or service providers can connect with customers.

The government introduced special provisions for ECOs to ensure proper tax compliance, transparency, and traceability of digital transactions under the GST system.

🧾 Mandatory GST Registration for E-Commerce Operators

Unlike regular businesses that enjoy a threshold exemption of ₹20 lakh (₹10 lakh for special category states), E-commerce operators are mandatorily required to register under GST, irrespective of their turnover.

This means that even a new or small-scale ECO with minimal business must obtain a GSTIN (Goods and Services Tax Identification Number). This mandatory registration helps tax authorities monitor online transactions and ensure appropriate tax collection and credit flow.

Key Rule:

Under Section 24(ix) of the CGST Act, any person who supplies goods or services through an e-commerce operator is also liable for registration, even if their turnover does not cross the threshold.

Thus, both ECOs and the sellers using the platform must be registered under GST, ensuring accountability at both ends.

💰 What is TCS (Tax Collected at Source) under GST?

One of the most important responsibilities of an E-commerce Operator under GST is to collect TCS (Tax Collected at Source). This rule was introduced under Section 52 of the CGST Act, 2017 and came into effect from 1st October 2018.

TCS Rate:

• 1% on the net value of taxable supplies made through the e-commerce platform
• 0.5% CGST + 0.5% SGST (for intra-state)
• 1% IGST (for inter-state)

TCS is not collected on exempt or non-taxable supplies, nor is it applicable to B2B supplies where the buyer is required to pay tax under reverse charge.

What is "Net Value of Taxable Supplies"?

It is the value of goods/services sold through the platform excluding returns and excluding GST.

This tax must be deposited with the government by the 10th of the following month using Form GSTR-8, and a TCS certificate must be issued to the supplier.

📋 Return Filing Requirements for ECOs

E-commerce operators are required to file monthly returns using GSTR-8, which captures:

• Details of outward supplies made through the ECO
• TCS collected from each seller
• GSTIN-wise breakup of sellers
• Adjustments for returned goods

Failure to file GSTR-8 may result in penalties and also block the suppliers from claiming TCS credit in their GSTR-2A.

In addition:

• The ECO must reconcile GSTR-8 data with sellers' returns to avoid discrepancies.
• Suppliers can claim the TCS amount as credit in their Electronic Cash Ledger.

⚖️ When is the E-Commerce Operator Liable to Pay GST?

In general, e-commerce operators act as intermediaries, and the seller is liable to pay GST. However, in some notified services, the ECO is directly liable to pay GST, even if the actual service is provided by another person.

This mechanism is known as the reverse charge on services through ECO.

Common Examples:

Type of Service	GST Liability	Notification Reference
Passenger Transport by cab (Ola, Uber)	ECO	Notification No. 17/2017-Central Tax
House accommodation under ₹1,000/day	ECO	Notification No. 17/2017 & Circular 27/2017
Restaurant services via Zomato/Swiggy	ECO	Notification No. 16/2021-Central Tax

Why this provision?

This ensures better tax collection from fragmented service providers like small restaurants, drivers, or homestay owners who may otherwise be unregistered or non-compliant.

📦 Practical Example of E-Commerce Operator under GST

Let’s simplify the concept with a practical example:

🔹 Scenario:

• E-commerce Platform: Flipkart
• Seller: ABC Electronics (GST registered)
• Buyer: Customer from Maharashtra
• Product: Smartwatch worth ₹10,000

Step-by-step Process:

1. Listing and Sale: ABC Electronics lists the product on Flipkart’s platform. A customer purchases it for ₹10,000.
2. Collection of Payment: Flipkart collects ₹10,000 on behalf of ABC Electronics.
3. TCS Deduction: Flipkart deducts 1% TCS = ₹100 (assuming intra-state supply: ₹50 CGST + ₹50 SGST).
4. TCS Deposit: Flipkart deposits the ₹100 with the government by the 10th of the next month.
5. TCS Certificate: Flipkart issues a TCS certificate to ABC Electronics.
6. GST Return Filing:
• Flipkart files GSTR-8.
• ABC Electronics shows the sale in GSTR-1 and claims ₹100 TCS in GSTR-2A, which gets credited to their cash ledger.

This ensures transparency, traceability, and proper tax credit flow to the supplier.

🔍 What about Unregistered Sellers?

While most sellers on e-commerce platforms are registered, some may be unregistered suppliers, especially in rural areas or small-scale services. In such cases:

• E-commerce operators must not allow unregistered sellers to operate unless the product/service category is exempted.
• ECOs should also ensure sellers provide valid GSTINs and file their returns regularly.

Failure to monitor sellers can lead to legal consequences and penalties for the operator.

📌 Key Takeaways

Point	Summary
Who is an ECO	Person managing a digital platform for buying/selling goods/services
GST Registration	Mandatory for ECOs regardless of turnover
TCS Deduction	1% on net taxable supplies made through the platform
Return Filing	GSTR-8 monthly + TCS certificates to sellers
Reverse Charge Cases	ECO liable to pay GST for services like cab rides, food delivery, etc.
Practical Importance	Ensures tax compliance in the growing digital economy

✨ Final Thoughts

The rise in online transactions has increased the prominence of the role of e-commerce operators within the GST ecosystem. ECOs are the pillars for digital tax governance in India, from the collection of TCS, filing returns, ensuring the sellers adhere to compliance, and more.

If you are or will be a digital marketplace, do ensure you are fully aware of your obligations arising out of the GST regime. A proper compliance would absolve you from penalties and thereby build trust among your sellers and users.

Read More: Common Myths About Income Tax in India