Implications of Tax Collected at Source (TCS) On E-Commerce Industry

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The E-Commerce industry has a unique place in the GST regime. GST Act incorporates Tax collected at source (TCS) provisions, however, it did not actively notify the provisions.

Now E-Commerce – TCS provisions have been notified by the Government on September 13th, 2018. From October 1st of 2018, it will start leaving the tax on e-commerce

Summary of the new updates:

    • A separate registration should be obtained by the E-commerce operators (ECO) for the purpose of TCS provisions.
    • E-Commerce operators (ECO) should deduct 2% of TCS on the value of supplies made through its platform and should remit the TCS amount to the government on or before 10th of subsequent month.
    • E-Commerce operator should also furnish a monthly return with the details of Tax on e-commerce collected on or before 10th of Next month. (GSTR 8)

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Tax on e-commerce collected at source new provisions :

E-Commerce is nothing but buying and selling of goods and services over the internet. The following two models of E-Commerce are recognised under the GST Act.

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Tax collected at source provisions applicable to E-Commerce operator

This article provides details on the TCS provisions applicable to E-Commerce operator – For more details of regular invoicing and registration under both the models – please visit the following link:

FAQ on E-Commerce TCS:

  1. Are TCS provisions applicable for all..??

No, they are applicable only for E-Commerce Operators. Not even for all E-Commerce operators, but only for E-Commerce Aggregators.

  1. If E-Commerce operator is operating in both Aggregator and Inventory model – what will happen..?

In that case, TCS provisions will be applicable only for sales executed in Aggregator model. For Inventory model sales – there is no requirement of deducting TCS.

  1. Is E-Commerce operator requires TCS registration?

Yes, E-Commerce operator should obtain a separate registration under GST for TCS purpose. He should also file a separate return (GSTR 8) for TCS purpose. He should also remit the TCS amount collected to the government on or before 10th of following month.

GSTR 8 will contain the following details. (As per the format released by the Govt. previously – it may be subject to amendments now in next few days)

Implications of TCS On E-Commerce Industry

  1. What is the TCS percentage deducted and how it is calculated?

On the E-commerce platform, from aggregate supplies , 2% TCS is deducted.

  • 1% CGST and 1% SGST in case of within the state sales
  • 2% of IGST in case of interstate sales.

The calculation considers the monthly sales returns of the aggregate value of supplies.

Ex: Mr.A, has sold goods worth Rs.10,000 through Flipkart platform in a particular month – and Mr.A also charged GST of 18% as 1,800 on the invoice.

Now Flipkart should deduct 2% of Rs. 10,000  i.e. Rs 200 as TCS and remit it to the government before 10th of next month.

  1. Explain the calculation on sales return

On the net sales in a month, the organization deducts TCS. This means from the monthly sales – deducts the sales returns. On the net amount, it calculates the TCS to deduct.

  1. Should ECO obtain state-specific registration for each and every state in which he operates?

As per the initial provisions of GST, yes ECO should obtain state-specific registration in case of operating in multiple states.

  1. What is the impact on sellers selling through ECO platforms?

For sellers who are selling through platforms like Flipkart and Amazon, there won’t be any additional compliances. However, the c whatever TDS the ECO deducts.

 

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