I. INTRODUCTION :
What is TCS in GST?
TCS in GST means that the E-commerce operators will have to collect the tax from those suppliers who are selling goods or providing services on/through their sites while making payments to such suppliers.
What is meant by E-Commerce?
E-commerce is the buying and selling of goods and services on the internet electronically and making payment electronically or via any other mode. Section 2(44) of CGST Act defines the term ‘e-commerce’ as the supply of goods or services or both, including digital products over digital or electronic network.
Who is an E-Commerce operator under GST?
Section 2 (45) of the CGST Act, defines ‘E-commerce operator’ as any person who owns, operates or manages the digital or electronic facility or platform for e-commerce.
Examples of E-Commerce operators are Flipkart, Amazon, Pay Tm Mall etc.
Who is an E-Commerce Supplier?
An entity that supplies goods or services on a digital e-commerce platform.
II. APPLICABILITY OF TCS PROVISIONS TO E-COMMERCE OPERATORS
Own website selling own products and other supplier’s products.
TCS Mechanism applicable
- Liability to deduct TCS:
As per provisions of section 52 of the CGST Act, every e-commerce operator, not being an agent is required to collect tax known as TCS on the net taxable value in case a supplier supplies some goods or services through its portal and the payment for that supply is collected by the e-commerce operator.
- Rate of TCS:
An e-commerce operator needs to collect tax @2% (1%CGST+1%SGST) from the supplier on the net taxable value of intra state supply of goods or services supplied through its portal. In case of inter-state supplies of goods or services supplied through e-commerce operator, it is liable to collect tax at a rate of 2% of net taxable supplies vide section 20 of IGST Act.
- Value at which TCS is to be collected:
Tax is to be collected on net taxable value of goods or services supplied by other suppliers through e-commerce operator.
Explanation to section 52(1) clarifies that “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both made during any month by all registered persons through the e-commerce operator as reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.
Further, specified services on which e commerce operator itself is liable to pay GST under section 9(5) is not included in the net taxable value and thus, no tax is to be collected on such amount.
- Credit claim of TCS by the supplier supplying through e-commerce operator :
Section 52(7) of the CGST Act, allows the supplier supplying goods or services or both through the e-commerce operator to take credit of the TCS amount collected in electronic cash ledger
III. Illustration Explaining TCS Mechanism:
Facts of the Case:
M/s A2Z Electronics Pvt Ltd (E-commerce Supplier) of Telangana sells Electronic products on Amazon.in (E-Commerce Operator).
A Customer from Gujarat ordered a Television worth Rs.55,000/- and made the payment online.
GST rate on Television is 18%
Commission Amount charged by amazon is 5%.
Explanation on how the operation takes place based on above facts.
Based on the above explanation TCS compliance would strike only when payment is made by E-Commerce Operator to E-Commerce Supplier.
Computation of payment would be as follows:
Invoice Raised by A2Z Electronics Private Limited to Customer
|Selling Price of Television||55,000|
|IGST @ 18%||9,900|
|Selling Price (Including GST)||64,900|
|Total Amount to be paid by Customer||64,900|
Payment Settlement by Amazon.in to A2Z Electronics Private Limited.
|Total Amount to be Received from||64,900|
|Commission deducted by Amazon.in||(5% of Rs.55,000)||(2,750)|
|GST on Commission||(18% of Rs.2,750)||(495)|
|GST TCS||(2% of Rs.55,000)||(1,100)|
|Amount to be paid by Amazon to A2Z||60,555|
|Electronics Private Limited|
IV. Procedural Compliance to be made by E-Commerce Operators.
Every E-Commerce operator has to compulsorily register itself under section 24(x) of CGST Act. Further, persons who are required to pay GST under section 9(5) has to compulsorily register themselves as per provisions of section 24(iv). The benefit of threshold limit of Rs. 20 lakh (Rs. 10 lakh for special category states except J & K) is not applicable to them.
- Deposit of TCS to the Government:
The amount collected as TCS shall be paid to the Government by an e-commerce operator within ten days after the end of the month in which such collection is made. [Section 52(3)
- Monthly TCS Return by E-commerce operator:
According to section 52(4), every e-commerce operator who collects TCS from supplier who supplies goods or services through its portal is required to file a monthly return in Form GSTR-8 within 10 days from the end of the month. The return shall include details of outward supplies of goods or services or both effected through e-commerce operator to registered or unregistered persons, including the supplies of goods or services or both returned through it, and the amount of TCS collected during a month.
- Correction in monthly TCS return:
After filing of return, if e-commerce operator discovers any omission or incorrect particulars therein, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest at 18% given in section 50. However, such rectification of any omission or incorrect particulars shall not be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual return, whichever is earlier. [Section 52(6)].
- Annual TCS return by e-commerce operator:
An annual statement in form GSTR-9B is to be filed by e-commerce operator on or before 31st December following the end of the year. [Section 52(5)].
V. Matching of supplies with the corresponding details furnished by suppliers supplying through e-commerce operator
- Liability to register under GST:
Suppliers who supply goods or services or both, other than specified services u/s 9(5), through an e-commerce operator, collecting TCS are compulsorily required to register themselves as per provisions of section 24(ix). However, they are eligible to take benefit of threshold limit of Rs. 20 lakh (Rs. 10 lakh for special category states except J & K) vide Notification No. 65/2017 – Central Tax dt 15/11/2017
- Matching of supplies:
Under section 37 of CGST Act, every supplier who is supplying goods or services or both other than notified services under section 9(5) is required to furnish a monthly.
return in GSTR-1 wherein the details of supply of goods or services through an e-commerce operator in TABLE -4C and TABLE-10 shall also be furnished. Sub section (8) of section 52 says that these details shall be matched with the corresponding details of State of place of supply and net taxable value furnished by e-commerce operator in monthly return (GSTR-8).
- Communication of mismatch in details to an e-commerce operator and supplier: As per section 52(9), where the details of outward supplies furnished by the e-commerce operator do not match with the corresponding details furnished by the supplier in GSTR-1, the discrepancy shall be communicated to both persons in forms GST MIS-3 and GST MIS-4 to supplier and e-commerce operator respectively. Such discrepancy must be communicated on the portal on or before the last date of the month in which matching has been carried out.
- Rectification of discrepancies:
Both parties i.e. supplier and e-commerce operator may make suitable corrections in their monthly returns of the month in which discrepancy is made available.
- Addition of discrepancy amount to the liability of supplier:
The amount in respect of any discrepancy which is not rectified either by the supplier in his valid return or the e-commerce operator in his return for the month in which discrepancy is communicated, shall be added to the output tax liability of the said supplier. An addition would be made in monthly return of supplier succeeding the month in which the discrepancy is communicated. This addition will be made in case where the value of outward supplies furnished by the e-commerce operator is more than the value of outward supplies furnished by the supplier.
Such addition to an output tax liability and interest payable thereon shall be made available to supplier electronically on common portal in Form GST MIS-3. [Section 52(10)].
- Interest on addition of discrepancy amount:
Section 52(11) states that the supplier in whose output tax liability any amount has been added as above, is liable to pay the tax payable in respect of such supply along with interest, at the rate of 18% specified under section 50 on the amount so added from the date such tax was due till the date of its payment.
VI. Notice to e-commerce operator regarding details of suppliers supplying through its portal.
Sub section (12) of section 52 empowers an authority not below the rank of Deputy Commissioner to serve a notice requiring an e-commerce operator to furnish such details relating to—
(a) Supplies of goods or services or both effected through such an e-commerce operator during any period; or
(b) Stock of goods held by the suppliers making supplies through such e-commerce operator in the godowns or warehouses, by whatever name called, managed by such an e-commerce operator and declared as additional places of business by such suppliers, as may be specified in the notice.
Within fifteen working days of the date of service of such notice, such an e-commerce operator is required to furnish the required information. Non- providing of requisite information may result in fine up to Rs 25,000 without prejudice to any action that may be taken under section 122.[Sub sections (13) and (14) of CGST Act].
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Please consult relevant profession before taking any actions based on the information present in the document.