“Yes and No.”
Indeed, you read it right.
GST may or may not be applicable for the C2C ecommerce model depending upon the mode of transaction preferred for trade. Ask yourself whether you are doing business with an auction-based model or that of classified advertisements.
To those of you, these terminologies seem alien, let us clarify it to you with a brief about Consumer-to-Consumer (C2C) business model.
What is the Consumer-to-Consumer (C2C) business model? How does it work?
The C2C business model enables the customer to sell the products to other customers. The customer who is selling across these sites can sell products and services; there is no restriction upon it. C2C is often referred to as the C2C ecommerce model, which clarifies that the business takes place on the digital platform.
The trend of such a business model was introduced by the globally renowned ecommerce business, eBay. The vintage & handmade product selling platform Etsy took it to the next level, and Craigslist allowed selling the services along with the physical products. The classified listing sites like Olx, MagicBricks are also based on a similar idea. You can call it a resell-when-used sort of model in laymen’s language. But, that does not apply to all the products sold on these platforms.
When selling across the marketplaces and internet companies, the customers can create classified ads, allow the customer to purchase for the set price, or bid on the provided price. The company that enables the selling of products across such a portal may allow the monetary transactions through the website or be the source of connecting the customers.
C2C business sites have the dashboard that’s easier to use, even for non-tech people. The customers selling across these platforms are mostly unregistered and don’t have a huge inventory. The marketplaces do charge the fixed listing fees for selling through the platform, and customers prefer to purchase, as the prices are less in comparison to that of the market price. Some registered businesses also prefer to sell on these sites, especially around the end of the season sales. C2C is a convenient platform, as you don’t have to visit the store and easily get the products delivered at your place.
Who Is Liable To Pay GST?
Before starting a business with the C2C business model, you must have an idea about the entities liable to pay GST.
- Businesses or sellers registered under tax regimes even before GST
- Normal taxable people
- Ecommerce operator or regulator
- Agents of a supplier
- Any individual whose annual turnover is above INR 20 lakh (or INR 20 lakhs for Northern India and hilly regions)
- Anyone who deals with the interstate supply of goods.
- Non-resident taxable person
- Payers under reverse charge mechanism.
Do You Have To Pay GST When Using The C2C Business Model?
In the C2C business model, you will not be liable to pay taxes if you are an irregular seller and have less than 20 lakh sales. If you are leveraging these sites to advertise your offerings with classified ads and none of the transactions are taking place through the portal, you need not worry about GST. But, if the customers are allowed to pay online for the products sold via other customers, you have to pay GST on the sales. Even if the GST is not levied on your sales, you have to pay it for shipping services and that on the listing fees over the website.
Now, this will give you a better idea if you have a liability to pay GST or not. If you have any further confusion, we suggest you interact with some Chartered Accountants or GST practitioners.
Is the C2C ecommerce business model profitable?
C2C business models are expecting the year on year growth in the ecommerce market, due to the ways of business conduct. The C2C model allows one set of customers to meet another set of customers with the demand-oriented goal, which is not possible from other marketplace ideas.
Another most important reason is the ease of the usage of the platform. The platform’s goal is to connect the people who are looking for certain types of products and services to another set of audience. When the demand is met with the supply of an adequate product, inappropriate pricing, more customers will be attracted to the website. Listing products on these sites will get you a good exposure. The businesses also list the classified ads on C2C platforms to enable direct reach to the audience.
The best thing about the C2C business model is that you can reach other sellers and customers. Other than quality control, there is nothing as critical about these ecommerce channels. Those enable easy payment options, create the best deal for customers to the products delivered at the best price, and ease shopping across ecommerce platforms.
Since all the C2C ecommerce models aren’t attracting taxes & GST in creation liabilities, it is easier for people to start selling online. If you are the one trying to figure out online selling options as of now, you can register yourself on the C2C platforms, and start listing your products now. However, if you are planning to start your own ecommerce business, C2C will not be enough for you. By registering yourself on Builderfly, you can build your ecommerce store and launch your business now. Don’t spend a lot of time simply thinking, registering for free, and trying all the functionalities on your own within a free trial period of 14 days.