Tax Collected at Source (TCS) under GST and its practical issue
TCS under GST: This article will help you to solve your problems related to 2 important areas under GST
- Concept of TCS and related Provision
- Practical problem/doubts
1. What is TCS under GST?
TCS is a tax which is collected by the electronic commerce operator (ECO) from buyer who places an order online and made a payment to online seller (who delivered the products or services) after deducting Commission and TCS @ 1%.
Concept of TCS on GST is applicable from 1st October, 2018.
2. Who is an ECO?
As per Section 2(45) of the CGST Act, 2017, ECO means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
Example- Amazon and Flipkart operators in selling of goods Uber, Ola, Swiggy, Urban Clap in selling of Services
3. What is Electronic commerce?
As per Section 2(44) of the CGST Act, 2017, electronic Commerce means the supply of goods or services or both, including digital products over digital or electronic network
4. What is the rate of TCS under GST?
TCS is deducted at 1% (0.5% CGST & 0.5% SGST or 1% IGST)
5. On which Value TCS is to be levied?
VALUE = NET SALES.
Let’s discus with Example
|Less- Sales Return||100|
So, TCS is deducted at 1% (0.5% CGST & 0.5% SGST or 1% IGST) on Rs.900/- TCS = Rs.9.
Therefore ECO (Amazon) will remit the amount say Commission on above is charged Rs.100 Amount Remitted by ECO = Rs900-Rs100 –Rs9 = Rs.791/- to Online Seller
6. When TCS under GST is NOT liable to be collected?
- Supply NOT affected through E-Commerce Operator
- Exempted Supplies affected through E-Commerce Operator
- Activities as per Schedule III of the Act (which shall be treated NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES)
7. What are the STATUTORY requirements for TCS to be fulfilled by collector?
- GST Return GSTR8 is to be filled
- Due dates of Return 10th of Next Month
- NO requirement to issue TCS Certificate
- It will be deposited within 10 days from the end of the month of supply.
8. Is it mandatory for e-commerce operator to obtain registration?
Yes. GST registration is mandatory without any threshold limit.
9. List of Problem addressed under this article.
|1||Should the ECO get registered State-wise?||Registration is required in EACH State/UT where tax collectors are located, where it does NOT have physical presence. However, Registration can be taken using the head office address as the place of business.|
|2||Foreign ECO do not have place of business (POB) in India since they operate from outside. But their supplier and customers are located in India. So, in this scenario will the TCS provision be applicable to such e-commerce operator and if yes, how will foreign e-commerce operator obtain registration?||IF registered supplier is supplying goods or services through a foreign ECO to a customer in India, such foreign ECO would be liable to collect TCS on such supply and would be required to obtain registration in each State / UT. If the foreign e-commerce operator does not have physical presence in a particular State / UT, he may appoint an agent on his behalf.|
|3||Is TCS under GST to be collected on charges?||Convenience/other charges are NOT “Service provided through e- commerce operator” u/s 52(1), NO TCS needs to be made.|
|4||If Sales return are > Sales. So, negative amount to be reported?||Negative amount cannot be declared. There will be NO impact in next tax period also.|
|5||Whether TCS is to be collected in respect of supplies made by the composition taxpayer?||A composition taxpayer cannot make supplies through e commerce operator (ECO) Thus, the question of collecting TCS in respect of supplies made by the composition taxpayer does not arise.|
|6||Whether TCS to be collected on supplies on which the recipient is required to pay tax on reverse charge basis?||No, TCS is NOT required to be collected on supplies on which the recipient is required to pay tax on reverse charge basis.|
|7||Is it necessary for e-Commerce operators who are already registered under GST and have GSTIN, to have separate registration for TCS as well?||Yes, They have to obtain separate registration for TCS whether such ECO is already registered and have GSTIN.|
|8||Whether value of net taxable supplies (Net Sales) to be calculated at gross level or at GSTIN level?||GSTIN level|
|9||At what time should the ECO collect TCS?||Point of Collection when supply has been made through the e- commerce operator even though actual collection of the consideration is received or not. For example, if the supply has taken place through the ECO portal on 30th October, 2021 but the consideration has been collected in the of November 2021 month, then TCS for such supply has to be collected and reported in the return for the month of October, 2021.|
The author of the above article is CA Jayprakash Pandey. CA Jayprakash Pandey is a practicing Chartered Accountant (Founder of Jayprakash P & Company) having Office at Mumbai, with more than 5 years of professional cum practical experience, Direct Tax, International Taxation, Indirect Tax & FEMA & RERA related advisory, litigation & compliance matters. If you have any query then author can be reached out – [email protected]