Tax Collection At Source (TCS) Provision Under GST

According to section 52 of CGST Act, 2017, every E-commerceElectronic commerce operator (Like Amazon, Flipkart, Snapdeal, online travel agents etc) shall collect TCS @  1% of the net value of taxable supplies made through it by other registered suppliers where the consideration with respect to such supplies is to be collected by the operator.

Explanation:

1. Net Value of Taxable Supply means gross sales less returns in a month.
2. Net Value of Taxable Supply does not include intra-state services the tax on which are required to be paid by the E-commerceElectronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such E-commerceElectronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services. [u/s 9(5) CGST Act 2017]
3. In Case of reverse charge and non-taxable supplies, TCS should not be deducted.

Example: Mr. Ram sells mobile online on Amazon India. He receives an order for Rs 10,000 inclusive of tax and commission. Amazon charges a commission of Rs 200. Amazon would, therefore, need to deduct 1% tax (TCS) on the amount, including the money paid as commission (Rs. 200) and GST ( Rs. 1800 when GST @18%). Amazon would thus be deducting tax for Rs 100 (1% of Rs. 10000). This TCS of Rs.100 will be reflected in the cash ledger of Mr.Ram.

😮 Attention: Applicability of TCS is not notified. It will be effective from a date to be notified subsequently, on the recommendations of the Council, by the Central Government

Registration

GST Registration is mandatory both for e-commerce operator and supplier of goods on such platform if any. Multiple sellers can have the same additional place of business if their goods are stored in a shared facility operated by the e-Commerce operator.

Service provider on such e-commerce platform is not required to get registration if (Notification no 65/2017):

1. Turnover doesn’t exceed 20 lakh(10 lakh in some case), or
2. Services are covered under RCM (reverse charge mechanism)   
   Composite Scheme is not available in E-commerce. Read More: Who Are Required To Get GST Registration.

 Deposit of TCS with the Government:

TCS should be deposited with appropriate govt. (Centre/state) by 10th of the succeeding month. In case of default in depositing TCS with govt. interest shall be levied.

TCS Return

Monthly Statement: E-commerceElectronic commerce operator should furnish a monthly statement in Form GSTR-8 within 10 days from the end of the month. The details furnished by the Operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8.

Annual Statement: E-commerceElectronic commerce operator is also required to file an Annual statement in form GSTR 9B by the 31st of December following the end of every financial year. E-Commerce++ electronic commerce operator++ can rectify errors in the statements filed, if any, latest by the return to be filed for the month of September, following the end of every financial year.

Reconciliation of details

The details of the supplies submitted by an E-commerceElectronic commerce operator in the annual statements (GSTR-8) will be matched with the details of supplies (GSTR-1) submitted by all such suppliers in their returns.

In case of any discrepancy in the value of supplies, the same would be communicated to the supplier in Form GST MIS-3 and E-commerceElectronic commerce operator inform GST MIS–4. If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such supplier. The supplier will have to pay the differential amount of output tax along with interest.

 Usage of TCS for paying GST

The collected TCS shall be credited to the cash ledger of the supplier who has supplied the goods/services through the E-commerceElectronic commerce operator. The supplier can use TCS to pay GST liability.

 E-commerceElectronic commerce operator duty to furnish information

 On a notice issued by any officer not below the rank of Deputy Commissioner to furnish details relating to the volume of the goods/services supplied, stock of goods lying in warehouses/godowns etc. every E-commerce is required to furnish such details within 15 working days. A default will attract penalty up to Rs.25000/- and penal action u/s 122.

Source:  CGST Act, 2017, CGST Rule, 2017, CBEC-Resource.