Tax Collected at Source (TCS) under Good and Service Tax System (GST)

Tcs Under Gst

Latest Update as on 18 April 2020

According to the GST law, the e-commerce business owners are not permitted to get TCS enlistment in certain States/UTs, where they don’t have any physical presence, and this turned into a few taxpayers.

So as to beat this challenge, from 01st April 2020 onwards, the online/ e-commerce business owners/ operators not having a physical presence in a specific state/UT has been permitted to apply for TCS enlistment dependent on their enrolled head office/premises address.



What is TCS Tax under GST?

The responsibility to collect tax at source has been set upon Electronic Commerce Operators and no different class of providers. At the point when an ‘Electronic Commerce Operator’ gets payment (which is done by someone else for a supply made by another person), he should collect TCS (Tax Collected at Source) at the rate to be told (this rate won’t surpass 1%) and pay it to the Government. This rate is to be applied to the ‘net worth’ as described in the Explanation to Section 51(1) CGST. A specialist isn’t secured by the TCS provisions.

Who is Electronic Commerce Operator?

An Electronic Commerce Operator is any person who is performing business via electronic platforms. Who operates or manages electronic or digital commerce platforms.

What is Electronic Commerce?

In simple words, we can explain electronic commerce as the sale- purchase of good or service over digital or electronic platforms.

Under Section 52, an Electronic Commerce Operator is obligated to collect TCS just if the sale-purchase has been made through such Operator by different suppliers or distributors and the tax is collected by the Electronic Commerce Operator. Supplies made by electronic commerce for its own are not covered under TCS provisions.

Who can collect TCS under GST?

Certain operators who own, work and oversee electronic commerce platforms are liable to collect TCS Tax. TCS tax applies just if the operators collect the consideration from the clients/ customers for merchants or suppliers. At the end of the day, when the electronic commerce platform operator pays the tax amount collected to the sellers they need to deduct a sum as TCS and pay the net amount.

The few exemptions to the TCS provision for the service provided by an e-com platform are listed below:

  1. Hotel Accommodation/clubs (unregistered providers)
  2. Transportation of travellers – radio taxi, motor cab, bikes
  3. Services like plumbing, carpentry, etc for Housekeeping (unregistered providers)

When one can collect TCS under GST?

TCS tax in GST will be collected by the e-commerce business operator while making a payment to the merchant. This payment will be the amount collected for the seller’s benefit for the provisions made by him through the online platforms. This expense will be collected on the net estimation of available supplies.

What is the TCS rate under GST?

The vendors or dealers supplying good and/or services through e-commerce platforms will get paid after the deduction of TCS @ 1%. The rate is suggested by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act. This implies for an intra-state dealing TCS at 1% will be gathered, i.e 0.5 % under CGST and 0.5% under SGST. Additionally, for an exchange between the states, the TCS rate will be 1%, i.e under the IGST Act.

Registration requirements for TCS under GST

The e-commerce platforms operators at liable to collect TCS need to necessarily enlist under GST and there is no edge limit exclusion for it. Additionally, the dealers providing merchandise through the online platforms are likewise obligatorily needed to get enrolled under GST aside from a couple of special cases.

Enlistment conditions are as per the following:

  1. Each e-commerce platforms operator who is needed to collect TCS under GST should obligatorily enlist under GST
  2. Each individual who supplies through an e-commerce platform, aside from the individuals who make supplies informed under area 9 (5) of CGST Act.

Area 9 (5) makes reference to the accompanying supplies – Transporting travellers by a radio-taxi and bike OR giving convenience in hotel accommodation, visitor houses, for private or housing purposes (unregistered providers) OR administrations of house-keeping, for example, handyman, craftsman and so on( unregistered providers). In each of the three cases, the e-commerce operator will pay GST, meet the compliances. Hence, providers don’t need to enroll on the off chance that they offer these types of assistance recorded in 9 (5) if they don’t cross the Rs 20 Lakhs limit for enlistment.

  1. Likewise, note that suppliers making a supply through an e-commerce platform are exempted from enlistment if their total turnover is not as much as Rs 20 Lakhs (accepting they don’t make between state supplies).
  2. Suppliers of goods supplying through an e-commerce platform are not excluded from enlistment.
  3. An e-commerce platform must enlist itself in GST in each state it supplies products or administrations.

Due date for depositing TCS

TCS will be deducted during the month wherein the supply is made. It will be deposited within 10 days from the month’s end of supply to the credit of the government. The tax collected will be paid in the following way:

  1. IGST and CGST will be paid to the central government
  2. SGST to respective state governments

What is the manner of payment?

To pay any amount collected as TCS applicability under GST, it shall be credited in the electronic liability register accordingly after debiting the e-cash ledger.

What is the Monthly Statement?

The person who collects the TCS shall create a monthly statement electronically containing all details as mentioned below:

1.Outward supply of goods & services

2.return of goods & services

In Form GSTR-8 within 10 days from the end of the month

What is an Annual Statement?

The person who collects the TCS shall create an annual statement electronically, under sub-section (3) of section 52 containing all details as mentioned below:

1.Outward supply of goods & services

2.return of goods & services during the financial year

Before 31 December following the end of the financial year.

Impact of TCS under GST

From the e-commerce platform business perspective, they should enroll for TCS return under GST in each state in which they work before first Oct 2018, which is the successful date of executing TCS provision. The ERP software must be all around incorporated to apply these arrangements in the everyday business easily. Besides, the working capital of the supplier selling through an online platform will be impeded until they document their return and guarantee the abundance of taxes paid. This can keep SMEs suppliers from selling products or services online.

From the government’s perspective, tax evasion will altogether decrease since the tax will be collected at every single transaction. ERP software like Marg ERP, which is ready with TCS provision can simplify the whole complex process & ensure smooth business operations.

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