For any business having sales up to 20 Lakhs, GST registration is not a must. But for the E-commerce industry, this threshold doesn’t exist. E-commerce operators and suppliers are not eligible for the GST threshold limit of 20 Lakhs. They all have to be registered for GST and pay tax regardless of their annual turnover. As per the Section 19 r/w Schedule-III of the Model GST Laws, “every form of online business needs to be registered under GST, irrespective of the amount of revenues generated”.
Even the small-scale vendors registered on your e-commerce store will have to pay the GST upfront when they receive payments. Such vendors will be liable to pay 1% tax collected at source (TCS). Though these vendors will have to get registered to claim refunds of the tax collected at source by the e-commerce operator. Any merchant who hasn’t registered under GST and found without proper registration will be forced to move out of Online business. All the e-commerce operators and suppliers are liable to deduct tax from registered vendors whenever there is a sale, irrespective of whether the seller is liable to pay tax or not. They will withhold 1% whenever the payment is made to the seller. It’s best for your online business to get registered under GST. Under GST, the government will also rate your business, which will be shown to the buyers and sellers of your business.
There will also be a Compliance Rating Score (CRS) under GST where the government will rate your business as per your GST tax paying habits.