Simplified Overview of GST Notification No. 36/2023: New Rules for E-Commerce Operators and Composite Suppliers

Simplified Explanation of Notification No. 36/2023-Central Tax

Purpose: This notification specifies the special procedures for electronic commerce operators (ECOs) regarding the collection of tax at source (TCS) for supplies made by composite suppliers.

Key Points:

1. Restriction on Inter-State Supply:
   • No Inter-State Transactions: The ECO is not allowed to facilitate any inter-state sales of goods by composite suppliers. Sales can only occur within the same state.
2. TCS Collection Requirement:
   • TCS Collection: The ECO must collect tax at source (TCS) for sales made by composite suppliers through its platform. This tax collected must be paid to the government according to the provisions of the GST Act.
3. Reporting Requirements:
   • Details in FORM GSTR-8: The ECO must report the details of these transactions in FORM GSTR-8 on the GST common portal.

Example:

1. Restriction on Inter-State Supply:
   • Scenario: A composite supplier, “GreenCraft”, wants to sell handmade crafts through “CraftEcom”.
   • Action:CraftEcom can only allow GreenCraft to sell within the same state, say Gujarat. Any attempts to sell to customers in other states, like Maharashtra, will not be permitted.
2. TCS Collection Requirement:
   • Scenario:GreenCraft sells crafts worth ₹50,000 through CraftEcom.
   • Action:CraftEcom must collect TCS on this ₹50,000 sale. For instance, if the TCS rate is 1%, CraftEcom collects ₹500 as tax and pays it to the government.
3. Reporting Requirements:
   • Scenario: After collecting TCS, CraftEcom needs to report the transaction details.
   • Action:CraftEcom will enter the transaction details into FORM GSTR-8 on the GST common portal to ensure compliance.

Effective Date:

• The procedures outlined in this notification are effective from October 1, 2023.