GST Compliance for Electronic Commerce Operators (ECOs) in India

GST Compliance for Electronic Commerce Operators (ECOs) in India

-By Drashti Panjrolia           

With the rapid growth of digital marketplaces, the role of Electronic Commerce Operators (ECOs) in GST compliance has become critical. The CGST Act, 2017 outlines specific provisions governing when ECOs are liable to pay GST and collect Tax at Source (TCS). Here is a clear breakdown of the key points.

1. Liability under Section 9(5) of the CGST Act

Under Section 9(5), an ECO is treated as the deemed supplier for certain notified services. This means the ECO is directly responsible for paying GST on these services, regardless of whether the actual supplier is registered.

Passenger transport services (cabs, taxis): ECO pays GST irrespective of the supplier’s registration status

Omnibus services: ECO is liable only if the supplier is not a company

Restaurant services (other than specified premises): ECO must pay GST. "Specified premises" refers to restaurants with tariffs exceeding ₹7,500 per day. In such cases, the restaurant itself is liable

Accommodation, housekeeping, local delivery, and similar services: ECO pays GST only if the supplier is not required to register

For Example : 

You order pizza worth ₹1,000 from a restaurant through Zomato.

Step 1: Nature of Service

Restaurant service (other than specified premises like hotel > ₹7,500 per day) is notified under Section 9(5).

Step 2: Who is liable to pay GST?

Under Section 9(5) of CGST Act, the E-commerce Operator (ECO) is liable to pay GST

So here:

Customer pays ₹1000+ 5% GST = ₹1,050 to Zomato

Zomato collects the amount

Zomato pays 5% GST to Government

Restaurant receives value (after commission), but does not pay GST on this supply

Key points

If the ECO has no physical presence in the taxable territory, a representative must be appointed to discharge tax liability

The liability under Section 9(5) is absolute, regardless of the supplier’s registration status

2. Tax Collection at Source (TCS) under Section 52

Section 52 governs TCS for ECOs on supplies other than those notified under Section 9(5). Key features include:

Rate of TCS: 0.25% CGST plus 0.25% SGST or 0.5% IGST on the net value of taxable supplies

Computation: Monthly, supplier-wise, after adjusting for returns

Deposit and credit: Collected TCS is deposited with the government and credited to the supplier’s electronic cash ledger. Suppliers can use this to pay their GST liability

Exemptions from TCS

-Supplier not liable for registration

-Exempt supplies

-Composition taxpayer (cannot supply through ECO)

-Import of goods/services (covered under RCM)

-Own products sold through own website

-Goods purchased from vendors & sold under own billing

Reporting requirements

GSTR-8: Monthly statement of TCS collected, filed by the 10th of the following month

GSTR-9B: Annual reconciliation statement, filed before 31st December

Non-compliance attracts interest, late fees, and penalties.

3. Registration Requirements 

a) Supply of Services (SOS) through ECO 

No compulsory GST registration if supply is below the threshold under Section 22

Registration is required only after crossing the threshold

b) Supply of Goods (SOG) through ECO 

Compulsory registration under Section 24 unless:

-No inter-State supplies are made

-PAN and principal place of business are declared on the portal

-Enrolment number is allotted

-ECO restricts suppliers from transacting without such enrolment

Registration is required after crossing the threshold

c) Registration for TCS

ECOs required to collect TCS must obtain separate GST registration, even if already registered for other purposes

d) Registration under Section 9(5)

Any person, including an ECO, liable to pay GST under Section 9(5) must obtain GST registration regardless of threshold limits

Once an ECO becomes liable under Section 9(5), threshold exemption is not available

4. Conclusion

The GST framework for ECOs ensures that tax liability is efficiently captured at the source while safeguarding suppliers’ rights to claim TCS credit. For ECOs, understanding when registration is mandatory, whether for TCS or as a deemed supplier, is crucial to avoid penalties and maintain compliance.

-Drashti Panjrolia 

Note : The work is original and the author does not claim over images. The facts are amended upto 31/10/2025