Types of GST Applicable on E-Commerce Sales in India: A Detailed Guide

As the e-commerce industry is rapidly growing in India, there are several questions that arise regarding the types of GST applicable on e-commerce sales and how these sales work. In this article, we will discuss the different types of GST applicable on e-commerce sales and how they work.

Types of GST applicable on E-Commerce Sales

When it comes to e-commerce sales, there are two types of GST that can be applicable:

CGST (Central Goods and Services Tax)

This tax is levied by the central government on the sale of goods and services within the state. The rate of this tax varies from state to state.

SGST (State Goods and Services Tax)

This tax is levied by the state government on the sale of goods and services within the state. The rate of this tax varies from state to state.

It is important to note that both CGST and SGST are applicable on intra-state transactions, which means transactions that take place within the same state. If an e-commerce sale takes place between two different states, then IGST (Integrated Goods and Services Tax) is applicable.

How does an E-Commerce Sale Work?

Now that we have discussed the types of GST applicable on e-commerce sales, let’s take a look at how an e-commerce sale works:

Step 1: Customer Places Order

The first step in an e-commerce sale is when the customer places an order on the e-commerce website. This can be done by adding items to the cart and checking out, or by directly purchasing the item.

Step 2: Payment

The customer then makes the payment for the order using a debit/credit card, net banking, or any other payment method offered by the e-commerce website.

Step 3: Order Processing

Once the payment is received, the e-commerce website processes the order. This involves checking the availability of the product, confirming the delivery address, and processing the shipment.

Step 4: Shipping

The product is then shipped to the customer using a courier service. The customer is provided with a tracking number to track the shipment.

Step 5: Delivery and Feedback

Once the product is delivered to the customer, they can provide feedback on the e-commerce website regarding their experience with the product and the delivery process.

Conclusion

In conclusion, e-commerce sales are subject to CGST and SGST when they take place within the same state, and IGST when they take place between two different states. Understanding the types of GST applicable on e-commerce sales and how they work can help e-commerce businesses to comply with the tax regulations and operate their business smoothly.