Collection of tax at source or TCS refers to tax which is collected by the e-commerce operator when a supplier supplies goods or services through its portal. TCS amount should be collected from the payment of supply collected by the electronic commerce operator. This article will be a guide for e-commerce operator to know the provisions of TCS under GST. If you are interest to know about TDS under GST, then read our earlier article A beginner’s guide to TDS under GST.
What is e-commerce operator and when TCS is applicable
As per section 2(45) of the CGST Act, 2017, E-commerce operator means any person who owns, operates, manages digital or electronic facility or platform for electronic commerce.
As per Section 2(44) of the CGST Act, 2017, electronic commerce means supply of goods and/or services including digital products over digital or electronic network.
In India, we have many e-commerce operators like Amazon India, Flipkart, Myntra, Snapdeal. Suppliers from India display their products as well as services on these e-commerce portal so that, it can be sold to the end consumer visiting the portal. Therefore, almost all products and services displayed on these e-commerce portal are actually supplied by some other person to the end consumer.
The price or consideration is collected by the e-commerce operator on behalf of these supplier from the end consumer. After deducting commission out of it, balance amount is paid to the supplier.
Please note, if an e-commerce operator display his own product or does not allow any other suppliers to display their products or services in the portal and do not collect any considerations on behalf of other suppliers, then provisions of collection of tax or TCS is not applicable. The simple reason is, as per section 52 of the act, TCS is required to be collected on the net value of taxable supplies made through its portal by other suppliers where the consideration is to be collected by the e-commerce operator. In this case, while selling products and services from its own portal, only GST at prevailing rate is to be charged.
Section 52 of the CGST Act deals with collection of tax at source. As per this section, every e-commerce operator is required to collect tax at source (TCS) from the net value of taxable supplies made through it by other suppliers. It should be collected whenever the e-commerce operator collects the consideration on behalf of the supplier.
Rate of TCS and deposit to government
The e-commerce operator has to collect 0.5% of the net value of intra-state taxable supplies from the supplier. Similarly, if its inter-state taxable supplies, then tax should be collected at the rate of 1% of the net value of supplies.
While calculating net value of taxable supplies, you are not required to take supplies returned to suppliers. Which means, the taxable supplies returned to the supplier on the electronic commerce is allowed as a deduction while calculating the net value.
The tax collected at source or TCS amount should be remitted to the government within 10 days after the end of the month in which collection was made. For instance, TCS collected by an e-commerce operator in the month of January, has to be remitted to the government treasury on or before 10th February.
Please note, there is no threshold limit specified in case of collection of tax at source – TCS.
Return to be filed by the e-commerce operator
The e-commerce operator has to file a monthly statement electronically in form GSTR-8 within 10 days after the end of each month in which supplies are made containing details which includes;
- outward supplies of the goods and/or services effected through it;
- Supplies returned through it;
- Amount collected by it as TCS.
In addition to the monthly return, the e-commerce operator is also required to file an annual statement on or before the 31st day of December following the end of the financial year.
The e-commerce operator can rectify the statement filed. The limit of rectification is earlier of the following two;
- Due date for filing statement for the month of September following the end of the financial year; or
- Actual date of furnishing of relevant annual statement
However, rectification cannot be done discrepancies discovered due to any scrutiny, inspection or enforcement proceedings.
The details of TCS furnished by the ECO in form GSTR-8 can be seen in supplier’s form GSTR-2A.
Supplier from whom TCS has been deducted, can claim credit of the TCS amount in his electronic cash ledger. This credit to electronic cash ledger of supplier, reflects from the monthly statement filed by the e-commerce operator.
