A claim being circulated on social media says that the government has imposed a new 5% Goods and Services Tax (GST) on e-commerce delivery services. In response to the claim, the Press information Bureau’s Fact Check team says the claim is fake as no new GST has been imposed on e-commerce delivery services. Citing the Central Board of Indirect Taxes and Customs (CBIC), the PIB Fact Check team says that the GST on these services has been lowered from 18% to 5%.
The CBIC, in a social media post, has stated, “The claim made in this post is wrong and factually incorrect. Delivery services, for example those provided by food apps, were earlier taxed at 18%. The tax on these delivery services has now been reduced to 5% as recommended in the 57th GST Council meeting. All delivery services provided through e-commerce platforms are now taxed uniformly at 5%. So, there is no new imposition of tax. Rather, there is a reduction in tax.”
The clarification comes amid claims that consumers will now have to pay a newly introduced tax on deliveries made through e-commerce platforms, including food delivery apps. However, the CBIC in a tweet on its official page has also clarified that the change is a reduction in the existing tax rate, not the imposition of a new tax.
Under the revised GST rates, delivery services provided through e-commerce platforms are now taxed uniformly at 5%, compared with the earlier rate of 18%, the CBIC clarifies.
The Income Tax Department has termed the claim of a new tax as false and factually incorrect. Therefore, the 5% GST should not be viewed as an additional tax introduced ahead of the festive season; instead, it reflects a rationalisation of the existing GST rate on these services, says the CBIC.
Frequently Asked Questions (FAQs) about e-commerce in the GST Act
What is Electronic Commerce?
As per a document called the GST sectoral series, Electronic Commerce, or e-commerce, has been defined in Section 2(44) of the CGST Act, 2017, to mean the supply of goods or services or both, including digital products over digital or electronic networks.
Who is an e-commerce operator?
An electronic commerce operator has been defined in Section 2(45) of the CGST Act, 2017, to mean any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce.
Is it mandatory for e-commerce operators to obtain registration?
Yes. As per Section 24(x) of the CGST Act, 2017 the benefit of threshold exemption is not available to e-commerce operators and they are liable to be registered irrespective of the value of supply made by them.
Will an e-commerce operator be liable to pay tax in respect of supply of goods or services made through it, instead of the actual supplier?
Yes, but only in case of services notified under Section 9(5) of the CGST Act, 2017. In such cases tax shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of the Act shall apply to such electronic commerce operator as if he is the supplier liable to pay tax in relation to the supply of such services.
A similar provision for inter-State supply is provided for in Section 5(5) of the IGST Act, 2017. (Refer to Notification No. 17/2017-Central Tax (Rate) and 14/2017- Integrated Tax (Rate) dated June 28, 2017).