Search Your Queries Related To Trilegal


Budget 2023: Penal provisions introduced for e-commerce operators

21 Feb 2023

Bank thumb image
The Finance Bill, 2023 proposes to penalise Electronic Commerce Operators who allow non-compliance of applicable provisions of the Central Goods and Services Tax Act, 2017 for supplies made on their e-commerce platform by unregistered persons and composition taxpayers.
Partner: Himanshu Sinha, Counsel: Shashank Shekhar, Senior Associate: Tushar Joshi, Associate: Samyak Jain

In a move to curb tax leakages, the Finance Bill, 2023 (Bill) has proposed several amendments to regulate supplies made through e-commerce platforms by persons not registered under the Central Goods and Services Tax Act, 2017 (CGST Act), i.e., unregistered persons, and composition taxpayers. Electronic Commerce Operators (ECOs) have now been burdened with the additional responsibility of ensuring compliance with applicable tax provisions in respect of such supplies and could be subjected to penalties of INR 10,000 or more for certain violations under the CGST Act.

Key provisions under CGST Act applicable to ECOs

Under the CGST Act, electronic commerce has been defined to mean the supply of goods or services or both, including digital products, over digital or electronic networks. An ECO has been defined to mean any person who owns, operates or manages a digital or electronic facility or platform, for electronic commerce.

Currently, the CGST Act contains various provisions to create an audit trail of supplies made through ECOs and to ensure that there is no tax leakage in respect of such transactions, for example –

  • If the consideration is to be collected by the ECO (and not by the supplier directly), the ECO must collect tax at source (TCS) at a rate not exceeding 1% of the net value of taxable supplies made by a supplier of goods or services through it.
  • Subject to certain exceptions, the ECO and the supplier above must be registered under the CGST Act.
  • For certain specified categories of services, ECOs must pay the Goods and Services Tax (GST) liability when such services are provided through their platform. These categories include transportation of passengers, provision of accommodation, housekeeping and restaurant services.

Further, at present, unregistered persons and composition taxpayers are ineligible to make supply of goods or services where payments are channelled through ECOs, leading to loss of substantial business for them. Being mindful of the same, the GST Council, in its 47th meeting, had granted an in-principle approval to allow both unregistered suppliers and composition taxpayers to make intra-state supply of goods through ECOs, subject to certain conditions.

Download PDF to read more

Subscribe to our Knowledge Repository

If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form. This service is reserved for clients and eligible contacts.


    Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website,, you acknowledge that:

    • You are seeking information about Trilegal of your own accord and there has been no form of solicitation, advertisement or inducement by Trilegal or its members.
    • This website should not be construed as providing legal advice for any purpose.
    • All information, content, and materials available on this website are for general informational purposes only.
    • Any information obtained or material downloaded from this website is completely at the user’s volition, and any transmission, receipt or use of this website is not intended to, and will not, create any lawyer-client relationship.
    • Information on this website may not constitute the most up-to-date legal or other information. Trilegal is not liable for the consequences of any action taken by any person based on any material or information available on this website, or for any inaccuracy in or exclusion of any information or interpretation thereof.
    • Readers of this website or recipients of content or information available on this website should not act based on any or all such content or information, and should always seek advice of competent legal counsel licensed to practice in the appropriate jurisdiction.
    • Third party links contained on this website re-directing users to such third-party websites should neither be construed as legal reference / legal advice, nor considered as referrals to, endorsements of, or affiliations with, any such third party website operators.
    • The communication platform provided on this website should not be used for exchange of any confidential, business or politically sensitive information.
    • The contents of this website are the intellectual property of Trilegal.

    We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:

    • The types of information we collect and why we collect them.
    • How we use your information to provide a personalized experience.
    • The measures we take to ensure the security of your data.
    • Your rights and choices in managing your personal information.
    • How we may share information with trusted partners for specific purpose.

    For more information, please read our terms of use and our privacy policy.

    Up arrow