Introduction and Purpose of TCS under GST
Section 52 of the CGST Act, TCS ideally applies when the supplier sells goods or services through the ecommerce operator’s platform and the said operator collects payment on behalf of the supplier.
In today time, hundreds and thousands of small seller sell upon on these e-trade platforms & these e-commerce operators are trade giants who are traceable and it is easy to impose responsibility on them. Hence, for this reason the government made E commerce operator accountable to collect a minimum amount in name of tax before transferring the proceeds to each of these sellers. This will help in tracking all those small sellers who otherwise would have been out of tax authorities reach and when these small seller would file timely returns and disclose business transaction to claim refund would enhance the compliance procedure under GST.
Who is liable to collect TCS under GST
Ecommerce operators who own, operate and manage e-commerce platforms are liable to collect TCS where they collect the consideration from the customers on behalf of vendors or suppliers.
In simple words, when the e-commerce operators pay the consideration collected to the vendors they have to deduct an amount as TCS and pay the net amount to the seller back. Example: Seller A sells watches on Amazon for Rs 20000/-.Amazon collected the same from his customer while delivery the parcel and he paid to seller back after deducting 1% on 20000 therefore net Rs 18000/- .
Exceptions to the TCS provisions for services provided by e-commerce platforms, they are:
hotel accommodation/clubs (unregistered suppliers),
transportation of passengers (e.g., radio taxi, motor cab, or motorcycle), and
housekeeping services like plumbing or carpentry (unregistered suppliers).
Registration Requirements
Every e-commerce operator has to compulsorily obtain GST Registration in each state where it operates
Even Foreign e-commerce operator have to obtain registration in India if it supplies or sale goods or services in India or in other works supplies are taxable in India.
In case of supplier of goods via e-commerce operators, suppliers have to obtain compulsory registration irrespective of their turnover or any other threshold limits
In case of supplier of services, they have to obtain registration only if they cross the threshold of registration of Rs 20 Lakhs.
When is E-commerce Aggregator Not Required to Collect TCS
If the supplies are exempt supplies under GST
If the supplies under GST falls under exceptions to TCS as mentioned above
If the supplies during the month excess the sales return and net supplies is negative. However, negative supplies cannot be carryforward to next month to adjust against next month supplies
If the supplies made are of a service provider who is not required to get registered under GST due to threshold exemption as explained above
If the payment is not collected by the E-commerce Agrregator than he is not liable to deduct TCS
Rate applicable under GST for TCS
The dealers or traders supplying goods and/or services through e-commerce operators will receive payment after deduction of TCS @ 1%. The rate is notified by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act.
This means for an intra-state supply TCS at 1% will be collected, i.e 0.5 % under CGST and 0.5% under SGST. Similarly, for a transaction between the states, the TCS rate will be 1%, i.e under the IGST Act. The tax has to be collected irrespective of the amount involved in a transaction. Unlike TDS provisions of GST , there is no limit of Rs 2,50,000/-
How to compute the taxable value of supplies for TCS
To determine the taxable value for the collection of TCS, the “Net Value of Taxable Supplies” is considered. This value is calculated as:
Total value of taxable supplies of goods and/or services (excluding notified services under the GST law by all registered persons Minus Taxable supplies returned to the suppliers through the e-commerce operator
GST Return and Due date for depositing TCS
When the liability for TCS is determined, the deduction is made during the month in which the supply is made. The TCS amount should be deposited within 10 days from the end of the month of supply to the credit of the government.
E-Commerce operators have to file GSTR-8 by 10th of the next month in which the tax was collected. This return will only be filed once the tax collected has been deposited to the respective credit of the government. For instance, the due date for GSTR-8 for Dec 2023 is on 10th Jan 2024.
This ensures timely compliance and avoids any penalties or interest charges.
The payment of tax collected under TCS is distributed in the following manner:
The Integrated Goods and Services Tax (IGST) and Central Goods and Services Tax (CGST) components are paid to the central government.
The State Goods and Services Tax (SGST) component is paid to the respective state governments.
Using GSTR-8 data by e-commerce sellers in GSTR-2A
The details submitted by the operators in GSTR 8 will be reflected in GSTR 2A. Note that these credit details will not be available in the GSTR-2B return as the tax collected will be reflected in the electronic cash ledger of the suppliers. The suppliers can then use their cash ledger balance to discharge their GST liability
GSTR 8 cannot be revised once it is filed. Any discrepancy found while matching and reconciling the supply data and GSTR 2A will be communicated to the operator and the supplier. If the discrepancy is not rectified within the given period, then the tax amount will be added to the liability of the supplier. The supplier will have to pay the difference along with the interest, if any.
Annual Return for E-Commerce Agreegator
GSTR 9B – This annual return is required to be filed by E-Commerce Operator by 31st December of the next Financial year. But, the provisions of TCS are made effective form 01.10.2018 and hence no annual return for Financial Year 2017-18 is to be filed.
Recent Changes in GSTR1 from January 2024
The GSTN added two new tables in GSTR-1 starting from January 2024 onwards.
Table 14 – Supplies Made Through E-Commerce Operators (In this table, you can add details of taxable outward supplies made through e-commerce operator.)
Table 15 – Supplies under Section 9(5) of the CGST Act (In this table, you can add details of taxable outward supplies on which the e-commerce operator is liable to pay tax under Section 9(5) of the CGST Act.)
Please refer our below article for few clarifications on E-Commerce Aggregator supplying goods via more than one e-comm aggregator - Click Here
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