Simplified Overview of GST Notification No. 37/2023: New Rules for E-Commerce Operators

Simplified Explanation of Notification No. 37/2023-Central Tax

Purpose: This notification outlines the special procedure for electronic commerce operators (ECOs) regarding the collection of tax at source (TCS) for supplies made by persons exempted from obtaining GST registration.

Key Points:

1. Enrolment Requirement:
   • For Supply through ECO: An electronic commerce operator (ECO) can only facilitate the sale of goods by a person exempt from GST registration if that person has been allotted an enrolment number on the GST common portal.
2. Restriction on Inter-State Supply:
   • No Inter-State Transactions: The ECO is prohibited from allowing any inter-state supply of goods by such exempt persons. This means that goods can only be sold within the same state.
3. TCS Collection Exemption:
   • No TCS Collection: The ECO is not required to collect tax at source (TCS) for the goods sold by the exempt persons through its platform.
4. Reporting Requirements:
   • Furnishing Details: The ECO must report the details of the supplies made by these exempt persons in FORM GSTR-8 on the common portal.
5. Multiple ECOs Scenario:
   • Payment Release: If more than one ECO is involved in a single transaction, the ECO who finally releases the payment to the exempt person is responsible for reporting.

Example:

1. Enrolment Requirement:
   • Scenario: Suppose “XYZ Electronics” is exempt from GST registration and wants to sell gadgets on “EcomPlatform”.
   • Action: XYZ Electronics must first get an enrolment number on the GST common portal. EcomPlatform can only list XYZ Electronics’ products if this enrolment number is in place.
2. Restriction on Inter-State Supply:
   • Scenario: XYZ Electronics wants to sell gadgets to buyers in different states (e.g., Maharashtra and Karnataka).
   • Action:EcomPlatform cannot facilitate these inter-state sales. XYZ Electronics can only sell within Maharashtra.
3. TCS Collection Exemption:
   • Scenario: XYZ Electronics sells gadgets worth ₹1,00,000 through EcomPlatform.
   • Action:EcomPlatform does not collect any tax at source on this sale due to XYZ Electronics’ exempt status.
4. Reporting Requirements:
   • Scenario: XYZ Electronics completes a sale on EcomPlatform.
   • Action:EcomPlatform must report this sale in FORM GSTR-8 on the GST portal, detailing the transaction.
5. Multiple ECOs Scenario:
   • Scenario: XYZ Electronics sells gadgets through EcomPlatform and another platform, “MarketPlace”. EcomPlatform processes the payment.
   • Action:EcomPlatform, which releases the payment, is responsible for reporting the transaction.

Effective Date:

• This procedure is effective from October 1, 2023.