impact of gst on e commerce & jobwork

E - Commerce

E - Commerce- Saurabh Batavia12/26/2016

E-commerce Models- Saurabh Batavia12/26/2016

Definitions- Saurabh Batavia12/26/2016

Shetty Naik & Associates

Existing Provision- Saurabh Batavia12/26/2016

Issues in existing ProvisionsMore complex tax framework involving VAT / CST, excise, and / or service taxes.

Hard time categorising their offerings into 'goods' or 'services' for charging either value added tax (VAT) / Central Sales Tax (CST) or service tax.

The interstate movement of goods from one state to another is a nightmare for an ecommerce operator because of the requirement of statutory forms, waybills, road permits etc.

There was no enough guidelines on taxation and documentation management for typical ecommerce sector transactions like e-wallet, Cash on delivery, gift vouchers, etc.- Saurabh Batavia12/26/2016

Sec 56 - Collection of Tax at SourceE-commerce Operator (ECO) shall collect 1% Tax at Source (TCS) of the net value of taxable supplies made through it, where the consideration is to be collected by the ECO.Net value of taxable supply:

Net value of taxable supply shall exclude service mentioned in Sec. 8(4) of GST Law (similar provision in IGST law u/s 5(3)):Categories of services specified by CG /SG which are provided through ECO on which the ECO shall be liable for paying tax.If the ECO does not have physical Presence, then tax shall be paid by the person appointed as his representative.ParticularsAmountSum of taxable supplies (of goods or services) xxx(Less:) Returns(xxx)Net value of taxable supply xxx

- Saurabh Batavia12/26/2016

Shetty Naik & Associates

Sec 56 - Collection of Tax at SourceThe amount collected by the ECO shall be deposited to Government within 10 days of the next month.Every ECO who collects tax as above shall also file a return within 10 days of the next month containing the following details:Supplies of goods/servicesReturns during the monthTax collectedThe supplier whose Tax is deducted can avail input of TCS deducted by ECO.The details furnished by the ECO shall be matched with that furnished by the Supplier. Discrepancies, if any, shall be communicated to both the persons.If the discrepancy is not rectified by the supplier or the ECO, then the discrepancy shall be added to the Output Tax Liability of the Supplier for the month succeeding the month in which discrepancy is communicated.Interest shall be charged at the rate specified in S. 45(1).- Saurabh Batavia12/26/2016

S. 45(1): Interest rate is yet not notified.Shetty Naik & Associates

Sec 56 - Collection of Tax at SourceAny authority above the rank of Joint Commissioner may serve a notice, requiring the operator to furnish details relating tosupplies of goods or services effected through such operatorstock of goods held by the suppliers which is managed by such operators and declared as additional places of business by such suppliers.

Every ECO on whom notice has been served shall furnish the details within 15 days from the date of service of notice.

Any person who fails to provide information as required above shall be liable to penalty upto Rs. 25,000.- Saurabh Batavia12/26/2016

Impact of GST on E-CommerceAny supplier supplying goods through ECO, shall get himself registered under GST. [S. 6(x)]Every ECO, irrespective of threshold shall get himself registered.ECO shall not be eligible for Composition Levy.Place of provision of SupplyStock transfer from the warehouse or godown shall also be covered under supply, hence Tax would be payable on it. However, input of such tax can be availed by the entity when the goods are finally sold to consumer.Freebies or discounts will have to be explicitly mentioned in the invoice to arrive at transaction value on which GST is applicable. Any post sale discount will attract GST.Thus there shall be sudden increase in compliance for both seller and ecommerce platform, they have to make necessary changes to their ERPs, new rules impact cash flows of small sellers (due to TCS). If an ecommerce platform wrongfully reports supply against a seller unless reconciled, it is considered as supply by seller which is unfair.- Saurabh Batavia12/26/2016

System Changes:Market places will have to make necessary changes to their ERPs to handle the newrequirements emerging due to GST: Each Order or Invoice will now need to carry HSN or SAC code as well. Place of Supply has to be determined (based on GSTIN for B2B and delivery address forB2C) ERP needs to be tweaked for deduction and accounting of TDS and reversal of the same incase of sales return. Return filing in itself be a huge process (reporting invoice level sales, debit notes, trackingmismatches etc.)Shetty Naik & Associates

Online information and database access or retrieval servicesPlace of supply shall be the location of the recipient of service. Person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied, namely:- (i) the location of address presented by the recipient of service via internet is in taxable territory; (ii) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of service settles payment has been issued in the taxable territory; (iii) the billing address of recipient of service is in the taxable territory; (iv) the internet protocol address of the device used by the recipient of service is in the taxable territory; (v) the bank of recipient of service in which the account used for payment is maintained is in the taxable territory; (vi) the country code of the subscriber identity module (SIM) card used by the recipient of service is of taxable territory; (vii) the location of the fixed land line through which the service is received by the recipient is in taxable territory.- Saurabh Batavia12/26/2016

Special provision for payment of tax by a supplier of online information and database access or retrieval services located outside India to specified person in the taxable territorySec. 12 provides thatsupplier of such service located in non-taxable territory shall be liable to pay tax on services received by non-taxable online recipient. If an intermediary is involved, such intermediary shall be liable to pay the tax if he satisfies all the following conditions, namely :- (a) the invoice or customers bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory; (b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge i.e. intermediary neither collects or processes- Saurabh Batavia12/26/2016

means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression job worker shall be construed accordinglyJOBWORK- Saurabh Batavia12/26/2016

Section 55: Special procedure for removal of goods for certain purposesA principal may send any inputs or capital goods without payment of tax to a job worker for job-work and after completion of work, within 1 year or 3 years(moulds and dies, jigs and fixtures, or tools sent out to a job-worker for job-work):Bring back inputs or capital goods to any of his place of Business without payment of tax.Supply such inputs, from the place of business of job worker on payment of tax within India or with or without payment of tax for exportProvided the Principal shall not supply goods from the place of Job-worker unless he declares it as an additional place of business, except where:The job worker is registered under GST u/s 23.The principal is engaged in the supply of such goods as may be Notified by the Commissioner in this behalf.The responsibility for accountability of the inputs and/or capital goods shall lie with the principal- Saurabh Batavia12/26/2016

Section 55: Special procedure for removal of goods for certain purposesWhere the input or capital goods sent for job-work are not received as per clause (a) or (b), it shall be deemed that such input had been supplied by the principal to the job worker on the day when said inputs were sent out.However, any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax if such job worker is registered, or by the principal, if the job worker is not registered.


Input tax credit in respect of inputs sent for job workThe principal shall be allowed input tax credit on inputs or capital goods sent to a job-worker for job-work.Input credit on inputs or capital goods shall be allowed even if the inputs are directly sent to a job worker for job-work without being first brought to his place of business.Where the inputs or capital goods are sent directly to a job worker, the period of one year (for returning) shall be counted from the date of receipt of inputs by the job worker. (except moulds and dies, jigs and fixtures, or tools)


Inputs removed for job work and returned on or after the appointed dayWhere any inputs received in a factory had been removed to a job worker in accordance with the provisions of earlier law prior to the appointed day and are returned to the factory on or after the appointed day, no tax shall be payable if such inputs are returned to the factory within six months from the appointed day.The aforesaid period on sufficient cause may be extended for a further period not exceeding two monthsIf goods are not returned as above input tax credit shall be liable to be recovered.Provided the Manufacturer & Job-worker has stated the details of stock in prescribed forms as on the appointed day.- Saurabh Batavia12/26/2016
