Comprehensive Guide to GST Readiness For eCommerce Sellers

The business in India has always been impacted by the complex tax structures, which acted as a
deterrent for planning e cient business operations. Every state has imposed its own set of rules
and taxes on the business holders. The lack of clarity on the tax structure has resulted in a chaotic
tax environment for the business industry.

The introduction of Goods and Services Tax (GST) will mark a signicant move in the field of tax
reforms in India. By amalgamating major Central and State taxes into a single tax class, it would
abolish double taxation in a simpler way and object the creation of a common national market.
GST will replace all indirect taxes levied on goods and services by the Central and state
governments.

As GST would be applicable on supply of goods or services as against the present concept of
tax on the manufacture of goods, sale of goods and provision of services, same will lead to many
bene ts not only for the consumers in terms of a reduction in the overall tax burden on goods,
which is currently estimated to be around 25%-30% but also it will mark signicant leads in Trade.

GST will be categorized in two components with State and Centre as separate stakeholders.
Components of Dual GST:

Out of 7 Union Territories*, UTGST is applied on only 5 of them, however, SGST can be applied in
Union Territories such as New Delhi and Puducherry, since both have their individual legislatures,
and can be considered as States as per GST process.

E-commerce organizations (Sellers & Marketplaces) are looking forward to the implementation of
GST expecting high clarity, and dismissal of state specific rules and multiple Taxes.

*List Of 5 Union Territories considered under GST:

1. Andaman and Nicobar

2. Lakshadweep
3. Dadra and Nagar Haveli
4. Daman and Diu
5. Chandigarh

Sellers and Marketplaces have to meet basic requirements to run business post GST
implementation.

Below are the mandatory requirement from Sellers and marketplaces which will be implemented in
st
Uniware to help sellers in smooth and issue free order processing from 1 July, 2017:

1- GST Number/ Registration:

All sellers mandatorily require to register under GST. So now even e-commerce sellers whose
aggregate turnover does not exceed the threshold limit for registration will still have to
compulsorily register to sell online.

Key Points for Registration:

If a seller has business with same PAN in different states is now expected to register
separately for each of the States where he has a business operation.
If a seller has two business verticals in a state, he/she may obtain a separate registration for
 each business vertical.
If seller has two di erent businesses with two TIN numbers in the same state, he can have
common GST registration for both.

As per this mandatory requirement, seller has to update GST No. in Facility, Billing Party,
st
Customer and vendor for order processing from 1 July in Uniware. Validation of GSTIN will be
done using state code & PAN rules which will be already stored in backend to validate the GSTIN
lled by the supplier.

2- HSN Number:

HSN Code stands for Harmonized System Nomenclature. HSN number is mainly used for
classifying goods to compute Value Added Tax in India. Now, same classification code (HSN) is
adopted for classifying Goods and Service Tax for GST as well.

Under GST, the HSN code would be utilized by a taxable individual for classification of goods , but
the format of HSN code will be based on the taxpayers turnover. When preparing Tax Invoice for
GST, the HSN number must be mentioned on GST Tax invoice and also to be declared while ling
the GST returns.

To mention HSN codes for the products will also become mandatory for sellers in Uniware as well.
Same information will be saved under item type (products) created in Uniware.

3-Issue of Tax Invoice Under GST:

Every registered person is required to issue a tax invoice at the time of supply of taxable
goods/services and the invoice shall contain following particulars:-

Supply of Goods/Services
 1. Description of goods/services;
2. Quantity of goods;
3. Value of goods/services;
4. Tax charged on Value of goods/services; and
5. Such other particulars as may be prescribed.

Further the invoice shall be prepared in triplicate, in case of supply of goods and duplicate in case
of supply of services. Uniware will provide all above required changes and number of invoices as
per supply of goods through its portal.

Below mentioned is the detailed information for the way of issuing Invoice after GST is
implemented, which will be provided by Uniware as well. Invoices generated through Uniware will
also have the prescribed format as described above.

Note: Fetching of Marketplace Invoices:

Unicommerce would not only provide GST ready invoice templates for both B2B and B2C
transactions, but also overhaul the architecture to fetch invoices from marketplaces, instead of
pushing the invoices to marketplaces, wherever required. For example, Unicommerce is moving to
the new version of APIs in case of Flipkart to be able to fetch their invoices, as well as pass on the
HSN code to the marketplace etc. to comply with the GST regime.

4- Credit Note:

Credit note will be re ected in the monthly return in which such notes have been issued.

When a Credit note should be issued:

When a registered dealer issues a tax invoice and in these invoices the tax amount is greater than
the tax return led for that period, seller has to issue credit note to the partner business owner
containing such particulars as may be prescribed.

In Uniware as well, credit notes will be provided for Sale Order, Inter-state Gatepass and purchase
order returns in the prescribed format set by Government bodies.

For returns ling post July 1, 2017 credit note is required only if GST was applied on the
corresponding invoice.

5- Return ling Process Under GST:

Monthly billing will constitute ling of all below mentioned forms on prescribed dates:

Form GSTR-1: Upload all invoice-wise details of supplies to registered taxable persons and
aggregate value of supplies to unregistered persons made through the e-commerce platform
must be provided. (By 10th).
Form GSTR-2A: The aggregate amount of tax collected by e-commerce operators (Tax
collected at Source or TCS)** in the previous month will be auto populated, based on Form
GSTR-8*** led by the e-commerce operators. (On 11th).
Form GSTR-2: The details of tax collected by the e-commerce operator can be accepted or
modi ed in Form GSTR-2 (On 15th).
Form GST ITC-1: Any discrepancy in supplies furnished with supplies reported by the e-
commerce operator is made available to a supplier. The discrepancy must be recti ed in
the return for the month in which it is communicated.If not recti ed and the value of
supplies furnished by the operator is more than the value furnished by the supplier, the di
erential amount along with interest will be added to the tax liability of the supplier for the
succeeding month.(On 21st).

**tax collected by e-commerce operators (Marketplaces) Every e-commerce operator should

collect tax @ 2% of net value of taxable supplies, out of payments to suppliers (sellers) supplying
goods or services through their portals.

Net value of taxable supplies = Value of taxable supplies made by all registered taxable persons through

the marketplace, other than noti ed supplies on which tax is paid by the marketplace (-) Value of taxable

supplies returned to the sellers.

***GSTR-8 Form GSTR-8 will be led by every e-Commerce operator (marketplace), who
is required to collect tax at source (TCS) under GST electronically through the
https://www.gst.gov.in/.

6- Compensation Cess-
A new cess with the name GST Compensation Cess for rst 5 years on some speci ed items will
be implemented which will be credited to the GST Compensation Fund. The need for this cess rise
to compensate the manufacturing states, as GST is a destination cum consumption based tax, so
in order to compensate states from this kind of probable loss this will be implemented along with
CGST, SGST and IGST.

Refer below link to know the Compensation Cess rates de ned by government as de ned in
Central Board of Excise and Customs: CBEC-Compensation Cess

Uniware will re ect this cess as on the Invoices as well.

7-Tax Calculation as per consumption of Goods supplied by Supplier

Under GST:

Refer below table re ecting the tax to be calculated as per location of supplier and place of
Supply, we have tried to cover all possible conditions containing all the calculations:

Note: Go Live date for these changes will be (Jul 1, 2017) in Uniware and if prepaid order is
received on Jun 30 invoice is printed on Jul 1, GST will not be applied in this scenario. However, if
same order will be COD, then GST will be applied.

8- Impact of GST on Warehouse Management Processes:

GST regime will not only effect the e-commerce operators and the sellers but will also have
important effects on warehousing management processes.

As per current tax regime, there is no uniformity and ease in tax implementation across various
warehouse management, logistics and supply chain management processes. Affect of taxation at
every step of these processes majorly affect the utilization of available resources. In present
scenario, the location of warehouse is generally chosen to evade the taxes and reduce the
logistics costs.

With GST, warehousing processes will also become uniform with the introduction of common
market for Goods and services, breaking the state barriers and borders. This will lead to reduction
in number of warehouses, and more organized warehouses enhancing the overall e ciency.

Unicommecres warehouse management software, Uniware is also ready to handle all warehouse
processes such as inbound, outbound etc. as per new GST rules. All such changes will re ect in
intra state/ interstate transfer documents, such as Gatepass.

To sum up, the below table describes the compliance requirements for GST regime and how
Uniware will help the sellers in incorporating the changes at their end:
Conclusion:

Taxation on e-commerce transactions in the current regime is confusing as di erent states have di
erent levies of tax and there is no clarity on Taxes levied on goods and services. The GST regime
will now bring uniformity in the taxation process for e-commerce platforms and sellers.

Seamless availability of input credit will result in reduced cost of operations for suppliers
such as warehousing, logistics, marketplace commission, etc. as they will now be able to
take the credit of tax paid on inputs, which was until now adding up to their cost.
Uni ed common national market in India for the goods and services, regardless of whether
they are sold at physical stores or online. GST will bring greater access to the customers
across the nation for sellers.
Prevent cascading of taxes as Input Tax Credit will be available on goods and services at
every stage of supply.
Simpli ed and automated procedures for various processes such as registration, returns,
 refunds, tax payments, etc.

As a supplier, it is important to plan for the GST regime. Awareness of the compliance requirements
under GST like registration for GST number, documentation, ling of returns etc., planning and
preparation for entering into GST module of taxation will ensure that suppliers can capitalize on the
new era of e-commerce in India.

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About Archi Bhardwaj

Working as Marketing Associate with India's leading online platform, http://www.unicommerce.com/
supporting ecommerce sellers to process orders and manage inventory online.