As per the notification, dated 4th August, 2023, the GST department has allowed composition dealer to supply through electronic commerce operators (ECOs), who are required to collect tax at source under section 52 of the GST Act. However, there are certain conditions that must be met.
Conditions for supplying through ECO?
ECO should ensure that followings conditions are met:
- The electronic commerce operator shall not allow any inter-State supply of goods through it by the composition dealer.
- The electronic commerce operator (ECO) shall collect the tax at source under section 52 of CGST act, 2017, on the value of supply of goods supplied through the portal. The said amount should be deposited to government.
- The electronic commerce operator (ECO) shall furnish the details of goods supplied by composition dealer in statement form GSTR-8 electronically on the common portal.
These conditions are designed to ensure that composition dealers who supply through ECOs are subject to the same GST compliance requirements as other taxpayers.
From when this provision is effective?
The said notification will be effective from the October 01, 2023.
Explanation to the sections or terms used above:
1. Section 52 under CGST Act:
The ECO needs to collect TCS at rate of 0.5% CGST, 0.5% SGST and in case of IGST 1% of the net value of taxable supplies made through the ECO portal.
For example, if an ECO facilitates a sale of goods worth Rs. 20,000, the TCS amount would be Rs. 1000 (0.5% * 20,000). The ECO would then remit this amount to the government.
Click here to read more about section 52 of the CGST Act.
2. Who is Composition dealer?
Composition dealer is a person who is opting the Composition scheme. Composition scheme is a scheme under which taxpayers can choose to pay the tax at a fixed percentage of turnover. Scheme is introduced to provide relaxation to small taxpayers.
Click here to read more about section 52 of the CGST Act.
3. Who can opt for this scheme?
A taxpayer whose aggregate turnover does not exceed Rs 1.5 crores, however the limit for Arunachal Pradesh, Mizoram, Uttarakhand, Nagaland, Manipur, Sikkim, Meghalaya and Tripura is Rs 75 lakhs. Further taxpayer should not provide service in excess of 10% of his aggregate turnover or Rs. 5 lakhs, whichever is higher.
4. Who are not eligible for composition scheme?
- A taxpayer who is carrying the following activities will not be eligible for this scheme:
- Manufacturer of pan masala, tobacco, or ice cream;
- Selling goods or services to other states taxpayer; or
- He is a casual taxable person or a non-resident.
Disclaimer:
The information provided in this content is for general informational purposes only. You should always seek the advice of an expert before making any decisions based on the information provided. We do not warrant or guarantee the accuracy, completeness, or usefulness of the information provided. Any reliance you place on such information is strictly at your own risk. We are not responsible for any damages, losses, or expenses related to the use of this content.
11 December 2023 
