At a glance
| Parameter | Detail |
|---|---|
| Provision | Section 9(5), CGST Act, 2017 |
| Effect | The operator is liable to pay tax as if it were the supplier |
| Applies to | Notified categories of service, not to goods generally |
| Supplier's position | Does not charge GST on those specific supplies |
| Relationship with Section 52 | Section 52 TCS does not apply to supplies covered by Section 9(5) |
| Where confusion arises | Sellers supplying both 9(5) services and ordinary taxable supplies |
| Reconciliation risk | Outward supply figures that do not agree with platform data |
The basic mechanism
Section 9(5) empowers the government to notify categories of service where the tax is to be paid by the e-commerce operator through which the service is supplied, as if the operator were itself the supplier.
This is a shift in the person liable, not an exemption. Tax is still paid on the supply. What changes is who pays it and who reports it, and that has direct consequences for how the underlying supplier invoices and files.
What it means if you are the supplier
- You do not charge GST on the supplies covered, because the operator discharges the liability
- Section 52 TCS is not collected on those supplies, since the operator is paying the tax rather than facilitating a supply by you
Your outward supply reporting for those transactions differs from ordinary marketplace sales
- Your other supplies, outside the notified categories, continue to be taxed and reported in the normal way
- Registration obligations still need to be assessed on your own facts rather than assumed away
The reconciliation trap
The difficulty arises for suppliers who have both kinds of transaction. A business supplying a notified service through a platform, and also selling goods through the same or another platform, has two different tax mechanics running in one set of books.
Booking both identically produces outward supply figures that do not agree with the platform's data, TCS expectations that never materialise on part of the turnover, and a GSTR-1 to GSTR-3B position that requires manual explanation every month. Separating the two streams at the point of entry is far cheaper than reconstructing them later.
Where to be careful
The notified categories have been added to over time, and the boundaries are drawn by the notification rather than by intuition about what feels like a platform service. Whether a particular supply falls inside Section 9(5) is a question to be answered against the current notification and the actual contractual arrangement, not by analogy with another business.
The other frequent error is assuming that because the operator pays the tax, the supplier has no GST obligations at all. Registration, reporting of other supplies, and input tax credit positions all continue to require attention.
Does Section 9(5) mean my supplies are exempt?
No. The tax is still payable on the supply. Section 9(5) shifts the liability to the e-commerce operator, which pays as if it were the supplier, so the revenue is taxed but you are not the person discharging it on those particular transactions.
Is TCS collected on Section 9(5) supplies?
No. Where the operator is itself liable to pay the tax under Section 9(5), it is not collecting tax at source under Section 52 on a supply made by you. Expecting TCS credit on those transactions and then not finding it is a common source of unexplained reconciliation differences.
What if I supply both 9(5) services and ordinary goods?
Separate the two streams in your books from the point of entry, because they carry different tax mechanics and different reporting. Combining them makes the monthly GST reconciliation require manual explanation indefinitely, and the separation is far cheaper to build in than to retrofit.
Do I still need GST registration?
That has to be assessed on your own facts rather than assumed either way. The fact that an operator discharges tax on certain supplies does not by itself dispose of your registration position, particularly where you make other taxable supplies, so take a specific view before concluding.
How do I know if my service is notified?
By checking the current notification issued under Section 9(5) against the actual nature and contractual structure of your supply, rather than by analogy with a similar-looking business. The list has been added to over time and the boundaries are drawn narrowly, so a specific determination is worth taking.
About the author
CA & CS Team
Regikart at Regikart. Want to discuss this in the context of your business?