• March 10, 2023

Goods and services are compressive taxes that are levied on the supply of goods and services in India. It has replaced multiple taxes like sales, services, excise duty, etc. with the growth of e-commerce government has made provision for online businesses to comply with GST law. GST for e-commerce website has rules in place.

From small businesses to large businesses everyone stands to operate their business online. The online store is evolving as a favorite medium for buying a product and selling goods or services. 

In this article, we will explore the types of GST applicable to online stores.

Before exploring the types of GST for e-commerce websites let’s have look at the GST registration rule for the online seller. 

GST registration for online seller

For online sellers, the Indian government mandated mandatory GST registration with yearly exemptions. A person who registered under GST is issued with the GSTIN number. For both goods and services, the basic exemption cap for e-commerce vendors is 40 lakhs and 20 lakhs. That means an online vendor who earns less than Rs. 40 lakhs and Rs. 20 lakhs annually are exempt from GST registration.

Let’s have look at registration requirements in different scenarios.

  • A seller is already registered under GST

If the seller is already registered under GST there is no need for any intimation, notice, or change in registration. They can continue their registration. But if a person registers under the composition scheme then they must take registration under the normal scheme. 

  • A person selling exempted goods

A person selling exempted Goods comes under e-commerce without GST. They are not required to take GST registration and can register under an online platform without GSTIN. 

  • Businesses in all states

Online sellers are required to take GST registration in every state where they sell the products. You can check our guide on GST registration to know more about it.

Types of GST applicable to online stores

The GST for e-commerce website has several categories that apply to the online store depend on the supply location. The place from which you supply the goods or services and the place where they are consumed is known as the place of supply.

GST is a destination-based tax, meaning that goods and services are subject to taxation only when they are utilized or consumed.

GST can be collected in the states where they are consumed.

Whether a transaction is considered interstate or intrastate under the GST depends on the location of the supply of the goods.

Wrong supply location determination will lead to tax collection from the incorrect state.

Following are the type of GST applied according to the place of supply

  • CGST – Central Goods and Service Tax 

CGST is levied on intra-state transaction i.e. transaction that occurs within the same state. E.g. If an online store based in a state sells the product in the same state. 

  • SGST – State Goods and Service Tax 

SGST is also levied on intra-state transactions but the revenue goes to the state government instead of the central government.

For example, If an online store based in Maharashtra sells a product to a customer based in Maharashtra SGST will be applicable to the transaction. 

  • IGST – Integrated Goods and Service Tax

IGST is levied on the inter-state transaction i.e. transactions occurring within two different states. 

For example, if an online store based in one state sells the products to customers based in another state, IGST is levied on such transactions. 

  • UTGST – Union Territory Goods and Service Tax 

UTGST is similar to SGST but it is applicable when goods or services and both are consumed by the territory regions of India including Andaman Nicobar, Dadra, and haveli, etc. 

It is important to understand Tax for e-commerce business and the type of GST applicable to their transaction. Failure to do so results in penalties and legal actions. Additionally, online stores should maintain online invoices and proper maintenance to ensure smooth compliance and GST regulation. 

Here are a few rules for the GST that applies to online sellers

  • Invoicing Rule 

In examining GST Tax for e-commerce businesses, the subject of who is responsible for paying Tax comes up. 

The answer to this question is sellers, whether they operate an e-commerce site or not. The online retailer is only the commission agent between the seller and the customer. GST is liable to the seller because the seller sold goods to them. 

As a result, the seller must send the consumer an invoice that includes the GSTIN, address, product information, date, amount of tax due, etc.

You can send autogenerated Invoices to your customer with the WooGST plugin. WooGST plugin is the best GST invoice plugin for Woocommerce stores that deals with GST calculation and autogenerates invoices.