TCS as per GST

tcs as per GST
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TCS as per GST

Provisions of TCS will be applicable from 1st October 2018.

It was notified vide CGST Notification no. 51/2018 dated 13th September 2018.


TCS as per Income Tax Act,1961

It is the tax payable by a seller to Government which he collects from the buyer at the time of sale. The goods on which the seller has to collect tax from the buyers is referred to in section 206C of the Act.

TCS as per Goods & Service Tax Act,2017

It is the tax payable by an e-commerce operator to Government, which the e-commerce operator collects from the payments received from the buyer on behalf of supplier/seller for the taxable supplies of goods or services made through the e-commerce portal.

As per section 52, an e-commerce operator is liable to collect TCS only when the e-commerce platform is used by other suppliers to sell/supply their taxable goods or services and the consideration is received by the e-commerce operator on behalf of the supplier.

Note: Compliance with TCS provisions does not arise when the supplier is an e-commerce operator and it supplies/sells on its own account.  For eg. If a person has a stand-alone e-commerce portal say and supplies/sell taxable goods or services from there. Then the provision of TCS won’t be applicable.

Note: Compliance with TCS provisions are applicable when the supplier is not the e-commerce operator itself, and the e-commerce platform is used for taxable supplies of other suppliers/sellers. For e.g. If the same person referred in the above example also sells/supplies taxable goods or services through the e-commerce portal of Amazon, then, in that case, Amazon will have the obligation to collect tax at source u/s 52 of CGST Act.

Note: Any supplier who intends to sell goods and/or services through an e-commerce platform needs to get registered under GST.

The exemption limit of turnover is not applicable for registration under GST. 

  • the supplier of goods
  • the supplier of services covered u/s 9(5)

But for the supplier of services other than services covered u/s 9(5), GST registration will take into consideration the exemption limit of turnover.   [Government had notified the same vide CGST Notification No. 65/2017 dated 15th November 2017.]

What is an e-commerce operator?

An electronic commerce operator is any person who, directly or indirectly owns, operates or manages a digital/electronic platform(e-commerce) that facilitates the sale/purchase of any goods and/or services.

What is e-commerce?

E-commerce is also called internet commerce or electronic commerce where it is possible to buy and sell goods and or services by using the digital/electronic network over the internet.

Who will collect the tax?

As per section 52(1) of the CGST Act, it is the obligation of the e-commerce operator to collect the tax at a specified rate from the consideration received for the taxable supply of goods or services by them on behalf of the supplier.

As per section 52(2) of the CGST Act, an e-commerce operator has the power to collect the tax without prejudice to any mode of recovery.

What is the rate for TCS?

The e-commerce operator shall collect tax at the notified rate based on inter or intrastate supplies made through the portal of the operator by other suppliers.

  • In the case of intrastate supplies: -1% of the net value of taxable supplies  (i.e 0.5% of CGST and 0.5% of SGST ) or
  • In the case of interstate supplies: -1% of the net value of taxable supplies  (i.e 1% of IGST).

Note: TCS @ 1% will be calculated on the value which is inclusive of commission, GST & SGST. For Eg. If Mr. X is a supplier who sells a toy of Rs.5,000(which is inclusive or tax & commission) on Amazon(e-commerce portal). On receipt of Rs. 5,000 by Amazon, it will first collect tax @1% on full value including commission i.e. Rs. 50. 

What will be the net value of taxable supply for calculation of tax?

As per explanation referred in section 52(1) of CGST Act, the net value of taxable supplies means the aggregate value of taxable supplies of goods or services or both, except for services us/ 9(5){are services where entire tax is payable by the e-commerce operator under reverse charge mechanism}, made through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.

Note: The value of net taxable supplies is calculated at the GSTIN level.


What has to be done with TCS collected by an e-commerce operator?

As per section 52(3) of the CGST Act, an e-commerce operator has to deposit the TCS collected with the Government within ten days after the end of the month of collection. The electronic liability register shall be credited by making payment by way of debiting the e-cash ledger. 

Which monthly statement or GST return needs to be filed by an e-commerce operator?

As per section 52(4) of CGST Act, A monthly statement in Form GSTR – 8 needs to be filed electronically within 10 days from the end of the month of the collection with the following details

  • Outward supplies of goods or/and services.
  • Return/ Inward supplies of goods or/and services.
  • The amount of TCS collected during the month.

For example, if the supply was made through an e-commerce operator in the month of September 2018 but the consideration for the same has been collected in the month of October 2018, then in such cases, TCS  will be collected and reported in the return for the month of September 2018.

Practical problem – Certain e-commerce operators have collected tax at source as per section 52 but were not able to obtain registration in the month of October 2018. As they do not have registration now TCS return i.e GSTR -8 cannot be filed. So Government has instructed that they may furnish the details of such TCS collected in the month of October 2018 in the first return(FORM GTSR-8) they file after obtaining registration. (Updated from FAQs on TCS published on 30.11.18)

If there is any error/omission in GSTR-8?

As per section 52(6) of CGST Act, if any error/omission or incorrect details were filed in the monthly statement (GSTR-8) and later it comes to notice of the e-commerce operator ( not by way of scrutiny, audit, inspection or enforcement action by the tax authorities) then such mistake can be rectified in a monthly statement in the month the mistake is noticed. But such rectification will be subject to payment of interest u/s 50(1) of CGST Act.

Note:  No rectification will be permitted

  • After the due date of furnishing Annual Return in GSTR -9 (Due date is 31st December)
  • Actual furnishing of the Annual Return

 whichever is earlier.

Which annual statement or GST return needs to be filed by an e-commerce operator?

As per section 52(5) of CGST Act, An annual statement in Form GSTR – 9B needs to be filed electronically before 31st December from the end of the financial year with the following details of the whole financial year

  • Outward supplies of goods or/and services.
  • Return/ Inward supplies of goods or/and services.
  • The amount of TCS collected during the year.

Note: It may be noted that provisions of TCS applicable to e-commerce operators were made effective from 1st October 2018 and hence the annual return GSTR 9B for the financial year ending 2017-18 need not be filed).

How do the TCS provisions impact the supplier?

The supplier will receive the consideration for the sale/supply from e-commerce operator

  • After deduction of TCS as per section 52 of CGST Act and
  • After the deduction of the commission charged by e-commerce operator for providing the platform to sale.

As per section 52(7) of the CGST Act, the TCS collected by an e-commerce operator can be claimed as a credit in the electronic cash ledger of the supplier.


How should a supplier verify the outward supplies made through e-commerce operators?

As per section 52(8) of the CGST Act, every supplier must match the details of their outward supplies made through e-commerce operators with GSTR-2A after the due date of filing GSTR -8 by the operator.

It will reflect in GSTR 2A of the supplier once the GSTR -8 is filed by the operator. The same will be credited and claimed in an electronic cash ledger.

What if there is any mismatch or discrepancy in supplies?

As per section 52(9) of CGST Act, if there is any mismatch/ discrepancy in

  • Details of outward supplies furnished by e-commerce operator u/s 52(4) and
  • Corresponding details of outward supplies furnished by supplier u/s 37.

Then the discrepancy shall be communicated to both the persons (supplier as well as e-commerce operator) in a particular manner and prescribed time limit.

How the discrepancy or mismatch in supplies be rectified?

As per section 52(10) of the CGST Act, the differential amount/ discrepancy in value which is communicated u/s 52(9), needs to be rectified by supplier or e-commerce operator in the month it is communicated.

But if it is not rectified then

  • such differential amount /discrepancy value
  • will be added to the outward supply of the supplier
  • in the succeeding month’s return of communication was made.

Note: Only if the outward supply furnished by an e-commerce operator is more than outward supply furnished by the supplier. The act is silent about the vice-versa case.

How much tax will be payable on differential/discrepancy value?

As per section 52(11) of CGST Act, the additional tax will be payable on the differential amount/ discrepancy value along with the interest u/s 50(1) will be payable for the period from the date, it was due till the date of payment.

Who can serve the notice to an e-commerce operator?

As per section 52(12) of CGST Act,

  • An authority not below the rank of deputy commissioner
  • either before or during the course of any proceedings
  • has a right to serve notice to an e-commerce operator
  • and require to furnish
    • details pertaining to supplies of goods and/or services made through the e-commerce platform during any period; or
    • details pertaining to the stock of goods held by the supplier
      • in godowns/warehouses, etc. declared as additional places of business by the supplier
      • but managed by the e-commerce operator.
What is the time limit for replying to the notice served u/s 52(12)?

As per section 52(13) of the CGST Act, the e-commerce operator to whom notice u/s 52(12) has been served needs to furnish the details within 15 working days from of the date such notice was served.

What are the penal provisions u/s 52?

As per section 52(14) of CGST Act, if an e-commerce operator fails to furnish the information required by the notice u/s 52(12) (read above) then shall be liable for

  • A penal action that may be taken u/s 122 of the Act and 
    • Rs. 10,000 or
    • Amount of tax evaded or
    • Amount of tax not deducted u/s 51 or
    • Amount of tax short deducted or
    • Amount of tax deducted but not paid to the Government or
    • Amount of tax not collected u/s 52 or
    • Amount of tax short collected or
    • Amount of tax collected but not paid to the Government or
    • Amount of input tax credit availed of or passed on or distributed irregularly or
    • Amount of the refund claimed fraudulently.

whichever is higher.

  • A general penalty u/s 125 of CGST Act which may increase to Rs. 25,000.

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