Indo-Asian News Service
New Delhi, June 15: The published draft bill of the destination-based, dual VAT-type Goods and Services Tax has clarified that all e-commerce transactions will attract GST which will be collected by the service operator as soon as the supplier receives payment. The model GST law approved at the state finance ministers’ meeting in Kolkata Tuesday says: “Every electronic commerce operator shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount representing consideration towards the supply of goods and/or services made through it.”
Bringing e-commerce under the purview of GST, which will unify the myriad indirect taxes, is likely to end the kind of recent arbitrary moves by state governments of Uttarakhand, Assam and Bihar that imposed a 10 per cent entry tax on goods sold online. e-Commerce companies have to currently deal with a complex tax framework involving VAT, central sales tax (CST), excise, and service taxes. For instance, for digital downloads involving material like software, music and e-books, confusion over whether the transaction is for sale of goods attracting VAT and CST, or a provision of service liable for service tax, has led to many litigations.
All forms of “supply” of goods or services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration by will attract CGST (central levy) and SGST (state levy). As GST will apply on “supply”, the erstwhile taxable heads such as “manufacture”, “sale”, and “provision of services”, among others will lose relevance, said Pune-based GST expert Pritam Mahure. “Further, certain supplies, even if made without consideration, such as permanent transfer of business assets, assets retained after deregistration will attract GST. Even ‘barter’ of goods, transaction which were hitherto untaxed in VAT regime, will attract GST,” Mahure said.