Gst excemption threshold and e-commerce portal

Portal 277 views 2 replies

SK

42 Points Joined February 2010

I am looking for the interpretation of a potentially conflicting issues in GST Act/Notification etc.

1. Scenaio specific to small accomodation/Homestay/Bed n Breakfast providers

2. It is not mandatory for a business/individual to register for GST if his annual turnover is less than Rs.20.0 Lacs. So that means he can not collect GST from his customers.

3. These businesses are pretty much dependent on travel portals like AirBnb , ClearTrip, MakeMyTrip , Booking.com etc.

4. The business model of all of the above portals are the same EXCEPT in one aspect with Booking.com.

All other portals EXCEPT booking.com collect money from online booking customer and send out the money to accomodation providers minus their

a) commission + GST

b) GST on Room Rate if it is more than Rs.1000 tariif according to slabs.

In case of Booking.com they do not collect any money from customer . All the money is collected by the accomodation provider.

Booking.com sends monthly invoice for

a) Commission on Sales ( No GST on commission)

b) GST statement on Room Sales according to tariff slabs.

Collection and remittances of GST was made the responsibility of the E-commerce operator vide Notification 17/2017 (tax rate).

5. In the case of the these small providers since they are not registered for GST they can not collect GST on Room Tariff from customers. It is understandable that they have to pay GST on commission as it is a 'service' they avail from the portals.

So do you see the conflict ? On one hand the accomodation provider is not required to register for GST (ie, under Rs.20.0 Lac/annum) and just because he is listed on a portal makes him liable for GST on Room Tariff which he can not collect from Guests because he is not registered for GST. GST payment on commission to portal is understandable.

Is this really a conflict in GST Act OR is it being mis-interpreted by portals OR are the portals making EXTRA money in the confusion ??

Replies (2)

Pankaj Rawat

GST Practitioner

55062 Points Joined June 2017

Yes , upto some extent you are correct , but as per section 24 CGST Act, the person supplying on behalf E-commerce is mandatory to take registration , but the same in case of Supply Of Services is being abolished by vide Notification 65/2107 CT.

Hence in this case such service provider is liable to obtain registration only when his Aggregate Turnover exceeds 20lac (As per Section 22 CGST Act )

* E-operator is liable to charge & collect GST (As per Noti. 17 CT (r))

SK

42 Points Joined February 2010

There is another circular(no. 27/1/2018-GST) EXCEMPTING 'Homestays' under 20 lacs from GST registration despite Section 24.

Yes, vide Notification 17/201 E-Comm is liable for GST.

Question is how come E-comm is charging GST on Room Tariff from a 'Homestay' supplier who is EXCMPTED under Rs.20 lac/annum rule. Thats where the confusion is . So the homestay owner is punished to be listed on a portal ?

E-Comm charging GST on their commission is understandable.

As an example

If Homestay A is listed on Portal-A with a room tariff of Rs.1000(12% GST )

The Homestay A pays Portal -A

1. 15% commission + GST

2. 12% GST on Room Tariff (Rs.1000-2500 slab) . Homestay cant charge guests GST while billing as they are

not registered. In all cases EXCEPT booking.com , the homestay bills and collects money . others collect money from guests directly and pays homestay owner the net of commission+GST and GST on room tariff.

Effectively 27% to be listed and get a booking from a Guest.