Section 9(5): The Deemed Supplier, and Why It Is Not Reverse Charge

Section 9 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

People call section 9(5) "reverse charge on e-commerce". It is not reverse charge, and the difference is not terminological — it decides whether input tax credit is available, who faces a classification dispute, and whose cash ledger is drained.

Section 9(5) empowers Government, on the Council's recommendation, to notify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if supplied through it, with all provisions of the Act applying to the ECO as if he is the supplier liable to pay tax. Section 5(5) of the IGST Act does the same for inter-State supplies. Where the ECO has no physical presence in the taxable territory, any person representing it is liable; where there is no representative either, the ECO must appoint a person in the taxable territory. Unlike reverse charge, the liability is shifted to a deemed supplier, not to a recipient — so no ITC follows.

The provision, element by element

Section 9(5) authorises the Government, on the recommendations of the Council, by notification, to specify categories of services, the tax on the intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it — and "all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services."

Two provisos deal with foreign platforms:

• Where the ECO does not have a physical presence in the taxable territory, any person representing it for any purpose in the taxable territory shall be liable to pay tax.
• Where the ECO has neither physical presence nor a representative, it shall appoint a person in the taxable territory for the purpose of paying tax, and that person shall be liable.

Section 5(5) of the IGST Act is a mirror image for inter-State supplies, with identical provisos.

Note the first proviso's width. It says a person representing the ECO "for any purpose" — not a tax representative, not an agent for supply. A person who represents the foreign platform in the taxable territory for any purpose can be fixed with the liability.

The five consequences the Handbook draws out

One — the ECO is the deemed supplier for everything, not just payment. It is "responsible for paying taxes, and also registration, return filing, and other payment obligations."

Two — the invoice goes out in the ECO's own name. "Issuance of tax invoices must be done by ECO under its own name as they are treated as 'deemed suppliers' for such notified categories of services like ride-hailing services, restaurant services, etc. and is therefore, responsible for filing the returns as a regular taxpayer."

Three — the supply must actually take place through the ECO. The deemed-supplier concept "will arise only if the transactions take place through the ECO." A website that only lists vendors, generates a lead, or shares a plumber's number is outside section 9(5) — "they are just facilitating the supply but are not engaged in allocation of the service provider or collection of payments."

Allocation and collection are the two markers. A platform that assigns the provider and takes the money is inside; a directory is not.

Four — the ECO carries the litigation. "if there is any litigation in respect of such services say with classification or valuation, then it's the ECO who will have to face the same even though it is not the actual supplier of services." A dispute about whether a particular preparation is restaurant service, or how a package should be valued, lands on the platform — which did not cook the meal or set the price.

Five — cash only. Tax on notified services "must only be paid in cash as no ITC allowed for setting off the liability in this case."

Why it is not reverse charge

The Handbook states the distinction in a single paragraph, and it is the most useful passage in the chapter:

"This mechanism is different from Reverse Charge Mechanism (RCM) as laid down in the Sections 9(3) & 9(4) of the CGST Act and Section 5(3) & 5(4) of the IGST Act. In RCM, the liability to pay taxes is shifted to the recipient whereas in the case of ECO, the liability is shifted to it but not as a recipient rather deeming it as a supplier. As a result, there is no ITC available to the ECO for the liability paid by it on behalf of the actual suppliers."

Everything follows from that one structural difference:

And the Handbook confirms the reporting consequence. Asked whether restaurant and other services supplied through ECOs can be recorded as the ECO's inward supply liable to reverse charge in GSTR-3B, the answer is no: "ECOs are not the recipient of these services supplied through them. Since these are not input services to ECO, these are not to be reported as inward supply (liable to reverse charge). As a result, the payment of taxes on behalf of the restaurants and other service providers do not entitle the ECOs to claim ITC for the same."

An ECO reporting 9(5) liability in Table 3.1(d) is making a double error — mischaracterising the supply and claiming a credit it is not entitled to.

Two knock-on rules worth knowing at the outset

No TCS on 9(5) services. The Explanation to section 52(1) defines "net value of taxable supplies" as the aggregate value of taxable supplies other than services notified under section 9(5). So the same supply is never both a 9(5) supply and a TCS supply. Circular No. 167/23/2021-GST said so for restaurant services: "ECOs will no longer be required to collect TCS and file GSTR 8 in respect of restaurant services on which it pays tax in terms of section 9(5)."

But the supplier's aggregate turnover still includes it. Applying section 2(6), the Handbook concludes that "the value of supplies made by the person through the ECO would be included in the value of the Aggregate Turnover as only the liability for payment of tax and compliance with other provisions lies with the ECO. Therefore, for determining whether registration has to be obtained or not it has to be taken into account."

That is a trap for small service providers. A restaurant or a driver whose entire tax is paid by the platform still counts that turnover for its own registration threshold — even though it pays nothing on it.

Key takeaways

• Section 9(5) makes the ECO the deemed supplier of notified services — for registration, invoicing, payment and returns.
• The invoice is issued in the ECO's own name.
• Reverse charge shifts to the recipient; 9(5) shifts to a deemed supplier — which is why no ITC attaches to the tax paid.
• The ECO faces classification and valuation disputes on supplies it did not make.
• A platform that only lists or generates leads, without allocating the provider or collecting payment, is outside 9(5).
• Foreign ECOs: a representative for any purpose is liable; failing that, the ECO must appoint a person.
• No TCS on 9(5) services — but the supplier's aggregate turnover still includes them.

Read next

• Section 9(5) Notified Services and Their Effective Dates
• Circular 240/2024: Cash Ledger Only, and No ITC Reversal
• Section 52 TCS: Rate, Net Value and When to Collect

Disclaimer: Positions stated as on 5 September 2026, based on section 9(5) of the CGST Act, 2017, section 5(5) of the IGST Act, 2017, sections 2(6) and 52 of the CGST Act, 2017 and Circular No. 167/23/2021-GST, as reproduced in the ICAI Handbook on E-Commerce Operators under GST (updated to 15 December 2025).