September 27, 2018

Everything you should know about TCS provisions under GST Law

Government has notified that TCS provisions mentioned in Section 52 of the CGST Act will be applicable from 1st October 2018. By enforcing the TCS provisions, Government will curb the tax evasion by keeping track of all the supplies made by the suppliers through e-commerce operators.

E-commerce operators have to deduct TCS under GST law on the payments made to the suppliers.

Let’s delve into the provisions and their applicability -

What is E-commerce?

Electronic commerce means supplying goods or services or both over the digital or electronic network. It also includes supplying digital products.


Who is an E-commerce Operator?

E-commerce Operator is any person who owns, operates or manages the digital or electronic facility or platform for electronic commerce. 


What are TCS Provisions?

Every e-commerce operator (other than an agent) has to deduct TCS at the rate of 1% (0.5% CGST + 0.5% SGST) for intrastate transactions and 1% IGST for interstate sales, on the net amount of taxable supplies made by the suppliers, through the e-commerce operator.

TCS has to be deducted only if the e-commerce operator collects the consideration for the transactions and then remits to the suppliers.


What is the net value of taxable supplies?

Net value of taxable supplies = Aggregate value of taxable supplies of goods or services or both, other than services notified under section 9(5), made by all the registered persons during a month minus value of taxable supplies returned to the suppliers during the month.


What does this mean for the sellers?

Sellers selling goods through e-commerce operators (Amazon, Flipkart etc.) will receive the payment from e-commerce operators after deduction of 1% TCS amount.

For instance, Rahul sells goods worth ₹ 10,000 (inclusive of tax and commission) through Amazon. Here, Amazon will deduct 1% TCS = ₹ 100 and its commission, and remit the remaining amount to Rahul.


What is the due date of depositing TCS to the Government?

E-commerce operators have to deposit the TCS deducted by 10th of the next month


What is the GST return form for the e-commerce operators?

E-commerce operators have to file GSTR-8 by the 10th of the following month. For instance, 10th November is the due date of GSTR-8 for October month. E-commerce operator has to report the details of outward supplies of goods or services made by the suppliers through it, along with the TCS deducted.


Can supplier claim the input tax credit of TCS deducted?

When the e-commerce operator files GSTR-8 return, TCS amount is reflected in the electronic cash ledger of the supplier, and he can utilise the input tax credit to set-off against his output tax liability.


What will be the reconciliation procedure?

Government will match the GST return filed by the e-commerce operators vis-à-vis GST return filed by the suppliers. If the amount of supplies in respect of a supplier as shown by the operator is more than the amount shown by the concerned supplier, the supplier is liable to pay tax on the additional amount in the next month with interest.

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