Which Types of GST are Applicable to E-Commerce Sales in India

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Web-based business implies a change in outlook. It is a "riotous" development that is entirely changing the conventional method for doing business. It is indicating a gigantic business development in our nation. Expanding web clients have added a ton to its development.

Electronic Commerce is simply one more approach to continue or improve the existing strategic policies pertaining to the business. It simply implies the buying and selling of merchandise and ventures through the electronic media or web. 

The merchant makes websites and mostly sells items or services legitimate to the client utilizing a computerized shopping basket and permits installment through MasterCard, debit card or through Electronic Fund Transfer installments and Cash on Delivery.  

Online business has developed colossally in India as more clients are purchasing and selling things on the web, with the assistance of cell phones and web networks. Under prior tax laws, online deals did not have any clear management. GST has appropriate principles set up for online business gateways like Amazon, Flipkart, and its vendors. In this article, we will talk about the kind of GST you should charge on your online deals.


What are the Types of GST Applicable to E-Commerce Sales in India

The Destination where the Goods and Services are Supplied

To put it in a simple and precise manner,

“Where you are selling from doesn't make a difference. Where your products are ultimately going is what is basically applicable.”

GST is a goal-based tax, i.e., the merchandise/facilities will be saddled where they are expended/utilized and not at its manufacturing place. Along these lines, the state where they are expended will reserve the option to collect GST. 

This makes the notion of the destination of supply vital under GST as each and every service of GST spins around it. Wrong assurance of the place of supply will bring about tax assortment by a wrong state. For instance, inter-state supply is wrongfully treated as intra-state supply and CGST and SGST are imposed rather than IGST. The main choice is to pay IGST independently and apply for the refund of CGST and SGST afterward.

This is applicable to each and every e-commerce website like Amazon, Flipkart, Snapdeal, etc. 
  • Now, when a vendor sells products to the buyer, the shipping address is the same as the billing address by default and the destination of supply is the place where those products got delivered to the buyer.
  • But, when a vendor makes a lot of products with some other entity, the shipping address no longer remains the same as the billing address and in this case, the destination of supply is obviously, the billing address i.e. the location of the one who brought it ultimately (it is presumed that the product has been delivered to the buyer).

Case- A Intra-State Sales
Suppose, Mrs. Anita of Rajasthan, orders a fridge from Flipkart. The dealer’s Mobile is registered in Kota, Rajasthan. The destination of the supply of the fridge is Jaipur, Rajasthan. Since the destination of supply is the same State as that of the location of dealer, CGST & SGST will be charged.

Case- B: Inter-State Sales
Mr. Gill of Amritsar, Punjab purchases a microwave from Amazon. The merchant is registered in Rohtak, Haryana. The destination of supply here in Mumbai, Maharashtra. Since the area of provider i.e. Haryana is a different state than the place of supply i.e. Punjab. Here, IGST will be levied.

Case-C: Selling to a Third Party
Suppose, Ms. Priya of Thiruvananthapuram, Kerala purchases a Home Theatre set from Snapdeal, which is to be delivered in Gorakhpur, Uttar Pradesh. Shyam Mobiles and Co. (online vendor enlisted in Delhi) processes the order request and sends then sends the Home Theatre system after which, Mr. Priya is charged by Amazon. It will be expected that the purchaser Ms. Sharma has gotten the Home Theatre despite the fact that it was really delivered to her mom. Here,

Destination of supply: Thiruvananthapuram, Kerala. 
Area of provider: Delhi
GST levied will be IGST
Case Study: Sell eBook to a Business
Mr. Bajaj, Mechanical Engineer of Jalandhar, Punjab, purchases a Book on Automation from Amazon. Kiwi Books, based in Delhi, processes the order and sends the book as mentioned.

Destination of supply: Jalandhar, Punjab (Location of the buyer)
GST imposed will be IGST (as the seller is enlisted in Delhi)

Example 5 – Sell an appliance to end consumer
Mrs. Shukla of Patna, Bihar places an order for cookware from Flipkart. Mehta Cookware and Co. (Jammu) processes the order and sends the book to the buyer.

Destination of supply: Patna, Bihar (Location of the buyer)
GST levied will be IGST (as the seller is registered in Jammu)

Invoicing Details:
Each provider needs to keep up receipt shrewd subtleties of provisions to enrolled taxable people and the total estimation of provisions to unregistered people made through the web-based business platform must be given. Thus, it is critical to raise GST consistent Invoices. 
Here are a few subtleties that ought to be referenced in the Sales Invoice:
  1. Name, address, and GSTIN of the provider
  2. Invoice number
  3. Date of issue
  4. Name, address and GSTIN of the recipient (if registered)
  5. HSN code
  6. Description of the products and facilities
  7. Quantity of goods
  8. Value (after discount)
  9. Rate and amount of GST
 If you have any queries regarding the eligibility of GST on E-commerce Sales in India, connect to InstaSpaces support for detailed knowledge.

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