Under this scenario of COVID-19 outbreak, e-commerce has given a new life during this period and the demand has been increased now a day for online products, now customer of different ages looks things online to purchase. Due to this many of the businesses have proposed to launch their online portal or have collaborated with e-commerce operator.
These days’ new ecommerce operators have joined the race with big tycoons like Amazon and Flipkart which are growing at massive rate, before starting a new business as a ecommerce operator there are certain things which are related to finance to be kept in mind so that there would be no issue further related to compliances in Direct and Indirect taxes.
Here are following points you can called as recipe to become New E-Commerce Operator: –
Permanent Account Number (PAN): – To start a business one need to get the Permanent Account Number (PAN) from Income Tax department which brings the existence of the entity.
GST Registration (Self): – It is mandatory for the E Commerce operator to get registered under GST as E-commerce operator within 30 Days from the start of the business irrespective of turnover exceeding the registration limit set by the department.
Tax Collected at Source (TCS) @ 1%: – E-commerce operator is required to deduct TCS (Tax Collection at Source) @ 1% from the payment made to vendors on the supply of material through web portal and required to submit the same to department.
GST Registration of E-Commerce Suppliers: – The Suppliers of Goods selling goods through E-Commerce Portal will be required to Mandatory registration under GST However, persons who are suppliers of service and supplying services through e-commerce operator are not required to register under GST if their aggregate turnover is less than Rs 20 lakhs per annum (Rs 10 lakhs in case of specified States) – Notification No. 65/2017-CT dated 15-11-2017. This relaxation is not applicable to supplier of goods.
No Composition Scheme for E-Commerce Operator: – E-Commerce Operator can not avail the Benefit of Composition scheme as it is not available to them.
Monthly GST Returns: – Monthly GST Returns are required to be submitted to the department by the e-commerce operator for total monthly supply and TCS collected from the Vendor. (If the same is not filled then there is penalty of Rs 100 under CGST & Rs 100 under SGST shall be levied per day. The total will be Rs. 200/day. The maximum is Rs. 5,000. There is no late fee on IGST in case of delayed filing. Along with late fee, interest at 18% per annum has to be paid. It has to be calculated by the taxpayer on the tax to be paid. The time period will be from the next day of filing to the date of payment. (Reduced by the Government Time to Time by Notification)
GST Invoicing: – E-commerce operator is required to comply with the provisions of GST Law for Invoicing, operator is required to mention following details on the GST Invoice issued to its customers: –
- Name, address, and GSTIN of the Operator/Vendor
- Invoice number
- Date of issue
- Name, address and GSTIN of the recipient (if registered)
- HSN code
- Description of the goods/services
- Quantity of goods
- Value(after discount)
- Rate and amount of GST
Online Payment Portals: – As these days the payment is being collected from the customers through Digital Mode so it is and operational requirement of the ecommerce operator to facilitates its customers to pay through the digital modes such as Pay Pal, Paytm, UPI, Net Banking, Debit/Credit Cards which are directly linked with the Bank Account of the Ecommerce operator.
Commission from Vendors: – E-commerce income is based on the Commission on the product sold on its website, so it is an important aspect to fix the percentage of the commission on sale of products through its website. (Our Recommendation would be to set commission on Sales slab basis initially in the starting phase)
Logistics/Supply Chain: – Supply Chain of the products are important part of the ecommerce business and also the main part of success of an ecommerce, so investment on the best supply chain software or workforce is operational need of this business. (This is the point of success of the various ecommerce operators like flipkart and amazon).
Advertisement and Business Promotion: – Online Advertisement, Business Promotion and Expense on SEO’s/SEM’s is very much required in the E-Commerce Operator business so investment is required to be made in effective and efficient manner in this area.
Following things are other than the Finance part but required to arrange by an e-commerce operator: –
- Domain Registration of the Business
- Brand Name of the Business
- Vendor Registration on Web Portal
- Vendor Product Registration on Web Portal
- Secured Payment gateway for Payments to be received.
How does an e-commerce sale work?
Let us takes example of Amazon.
- Seller registers on the marketplace/e-commerce platform such as Amazon
- Seller takes pictures and uploads them to the website along with descriptions and prices
- Buyer orders the product
- Items are shipped by seller directly or through Amazon’s logistics centre
- Amazon charges a subscription fees/ commission on sale
- Amazon assists sellers in everything from photography of goods to delivery and payment
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Chartered Accountant and Experienced Professional with a demonstrated history of working in the financial services industry.