GST is here to change the system of Online Trading  

GST is here to change the system of Online Trading

New GST Law will have great impact on Online Retail Trade in India. In fact New GST Law will completely change the system of Online Trading. However the Consumer will be unaffected by these changes. In reality Indian Consumer and Genuine Indian Supplier, both will be benefitted by the system changes.

Prevailing Conditions: Up till now the general practice is that consumer places online order and makes payment to E-Commerce Operators like Amazon, Flipkart, Ebay, etc. but the goods are supplied to the consumer by a third party (Actual seller). E-Commerce Operators make weekly or monthly payment to the Actual Seller for sale after deducting their commission as per their policy. So the person with whom you place order and the person who supplies your order are two different persons.

E-Commerce Operators are like agents of Suppliers. In these settings Consumer at times has to suffer hardships in case of Claim and Dispute. Also this agent relationship was boosting illegal trade as E-Commerce Operators did not have any responsibility towards VAT and they did not have complete and correct information of the Supplier. Further the E-Commerce Operators encouraged such business practice so that consumer can get products at a lower price. Now the interesting question in all this scenario is whether the E-Commerce Operators are Principal or Agent?

Role of E-Commerce Operators in GST: The New GST Law requires Compulsory Registration of E-Commerce Operators in every State of India. All in all 3 new featured have been added to GST which has increased the responsibilities of E-Commerce Operators:
1. Compulsory Registration for E-Commerce Operators
2. E-Commerce Operators have to deduct 1% TDS under GST Law
3. As per Section 86 of CGST, the liability to deduct and deposit GST is on E-Commerce Operators (If E-Commerce Operators is the Principal)

Online Retail Trading under GST: Owing to New GST Law following changes shall be visible in Online Retail Trading:

1. Illegal trade will be curbed benefitting both Consumer and Seller.
2. Small Suppliers will exit the market.
3. E-Commerce Operators will do self-billing.
4. Decrease in Online Retail Trade will lead to increase in local trade.
5. Presently maximum supply / booking / business have been controlled.
6. E-Commerce Operators will be responsible for Tax Evasion
7. Multi-National Companies and E-Commerce Operators shall make efforts to change the Law
8. If E-Commerce Operators does self-billing then their business / sales are bound to drop leading to increase in Administrative Expenses.

CA. K.C.Moondra