E-commerce has grown a lot in India because more people buy and sell things online now that they have computers and access to the internet. Before, there were no clear rules about how to tax online sales. The GST has clear rules for online shopping sites like Amazon and the sellers who use them.

In this piece, we’ll talk about what kind of GST you should charge for sales you make online.

Place of supply

GST is a destination-based tax, which means that things and services will be taxed where they are used, not where they are made. So, GST will be collected by the state where it is used.

All of the rules of GST are based on the idea of the place of supply, which is why it is so important.

SGST, CGST, and IGST will be charged based on whether the goods were sold within the same state or to a different state. This is decided by where the goods were sold. If the place of production isn’t figured out correctly, the wrong state will get the tax money. For example, inter-state sales are mistakenly treated as sales within the same state, and CGST and SGST are filled out instead of IGST. The only choice is to pay IGST separately and ask for a CGST and SGST return.

In plain English, it doesn’t matter where you sell from. It’s important to know where your things are going.

This would be true for all online shopping sites, like Amazon, where people sell things.

Let’s go over the rules for the place where things are sold:

Supply	Place of supply
Seller sells goods to the buyer (shipping address is same as billing address)	Place where the goods are delivered to the buyer
Seller sends goods to someone else (Shipping address is different from billing address)	Billing address (It is assumed that the buyer has received the goods and the place of supply of such goods will be the location of the buyer)

Example 1: Intra-state sales
Mr. Raj from Mumbai, Maharashtra, orders a phone from Amazon. The registration for the seller Happy Mobiles is in Nagpur, Maharashtra.

Mumbai, which is in Maharashtra, is the place of supply. The source is in the city of Mumbai. Since both the place of supply and the site of the supplier are in the same state, CGST and SGST will be charged.

Example 2: Inter-State sales
Mr. Raj, who lives in Mumbai, Maharashtra, buys a cell phone from Amazon. Mobile Junction is listed as a business in Bangalore, Karnataka.

Mumbai, Maharashtra, is the place of supply in this case. Since the place of delivery (Mumbai) is in a different state than the place where the goods are made (Bangalore), IGST will be charged.
Example 3: Send to a third party
Mr. Raj, who lives in Mumbai, Maharashtra, buys a mobile phone from Amazon as a gift for his mother, who lives in Lucknow, Uttar Pradesh. M/s All Mobiles, an online store based in Gujarat, takes care of the order and sends the phone, and Amazon sends Mr. Raj a bill.

The phone will be thought to have been sent to Mr. Raj in Maharashtra, even though it was actually sent to his mother.

Place of supply: Mumbai, Maharashtra

Location of supplier: Gujarat

GST: IGST

Digital goods such as eBooks

Selling digital goods like eBooks will be treated as services.

Transaction type	Place of supply
B2B or B2C	Location of the buyer

Example 4 – Sell eBook to a Business
M/s Sharma Chartered Accountants of Mumbai, Maharashtra, orders a book about money from Amazon. All Books Ltd. (Gujarat) takes care of the order and gives out the book.

Place of supply: Mumbai, Maharashtra (Location of the buyer)

GST: IGST (as the seller is registered in Gujarat)

Example 5 – Sell eBook to end consumer
Mr. Raj from Bangalore, Karnataka, orders a best-selling book from Amazon. All Books Ltd. (Gujarat) takes care of the order and gives out the book.

Place of supply: Bangalore, Karnataka (Location of the buyer)
GST: IGST (as a seller is registered in Gujarat)
IP address of the buyer’s device will not be important.

Invoicing

Every supplier has to keep track of invoice-by-invoice information of what they sell to registered taxable persons. They also have to give the total value of what they sell to unregistered people through the e-commerce platform. So, it is very important to make invoices that follow GST rules.

Here are a few things that should be on the Sales Invoice:

Name, address, and GSTIN of the supplier
Invoice number
Date of issue
Name, address and GSTINof the recipient (if registered)
HSN code
Description of the goods/services
Quantity of goods
Value(after discount)
Rate and amount of GST

Also, if the e-commerce operator has to follow e-invoicing rules, he has to use the Invoice registration site to make the IRN and QR code for B2B invoices. Try Clear Tax’s e-Invoicing option for an easy way to make an IRN. It is quick, reliable, and cheap!

How can Clear Tax help in Invoicing?

Clear Tax’s Clear One program makes things easy and quick for you. Based on your GSTIN and the buyer’s GSTIN, the software will instantly figure out the place of supply and tell you if you need to charge CGST, SGST, or IGST.
It’s time to switch to an intuitive, comprehensive,
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This is how the invoice would look with all the details in it.

After the invoices are made, GST returns must be filed by the due times for monthly and quarterly filers. ClearTax GST software makes it easier for you to be compliant! Check out gst.cleartax.in.

E-commerce benefits both customers and sellers

When compared to local shops, customers have a wider range of choices. Items are often cheaper online because the sellers don’t have to pay for rent or promotion.

The sellers can:

Reach a bigger market
Increase their sales volume
Avoid problems and costs of setting up branches
Interact only with e-commerce operator for payment reducing debt management costs

How does an e-commerce sale work?

Seller signs up on a website or e-commerce site like Amazon
The seller takes pictures and puts them, along with explanations and prices, on the website.
The buyer gets the item
Most of the time, things are shipped by the seller directly or through the logistics center of the e-commerce operator.
The company that runs the online store charges membership fees or a commission on each sale.
An e-commerce-commerce helps sellers with everything from taking pictures of things to making sure they are delivered and paid for.

Types of GST applicable on E-Commerce Sales