Goods and services tax for eCommerce Businesses

admin April 20, 2023 0 Comments

A large number of countries impose goods and service tax (GST), which is one of the forms of tax that is imposed on goods and services, as well as a form of sales tax, and it represents one of the forms of indirect taxes, which some countries have begun to apply to e-commerce as well, and in This article will provide you with all the details about the goods and service tax (GST) as well as some examples for illustration.

What are goods and service tax (GST)?


The GST is a form of sales tax that is levied on goods and services. It is paid by the consumer when he purchases the item but is ultimately collected by the seller and sent back to the country.

Also, the goods and service tax (GST) is a form of indirect tax, and each country determines its rate according to its policies and what it deems appropriate for itself and its citizens.

As for the method of calculating the GST, it differs from one country to another.

In general, the calculation of the GST takes the following formula:

  • GST Amount = (Original Price x GST Rate) ÷ 100

GST for eCommerce Businesses

Recently, the GST has been imposed on e-commerce, and this type of tax is being collected on e-commerce.

Some countries have made it a mandatory law for e-commerce merchants, that those merchants will get the price of an item sold online after a 1% discount as a GST.

The collection of GST on e-commerce will have a significant impact on it.

Especially since it has become mandatory in many countries, merchants who sell goods and services via e-commerce must register for the GST regardless of the value of their supply.

Learn how Increase ecommerce sales?

GST and VAT difference

Many confuse both GST and VAT, but in fact, there is a difference between them, although they carry a common number of characteristics.

The difference between them can be based on the rules that each country sets on the same taxes, such as the tax rate or the articles that will be exempted from taxes.

But in general, both GST and VAT are indirect consumer taxes, i.e. they are levied on the purchase cost of goods sold and services and compulsorily collected by the state under its legal authority.

Shipping and claiming GST

The goods and service tax is levied on the cumulative value of the supply, and if shipping charges are included then the shipping charges must be taxed at the same tax rate as the supply of the goods or consignment.

The type of goods and service tax charged for shipping the goods also depends on whether the shipment is domestic or international.

Goods and services tax examples


There are many examples of GST, and here are a number of goods and service tax (GST) examples imposed by some countries such as India:

  • Service tax.
  • Entry Tax.
  • Purchase Tax.
  • Luxury Tax.
  • State VAT.
  • Central Sales.
  • Entertainment Tax.
  • Taxes on advertisements.
  • State cesses and surcharges.
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