TCS Under GST - Compliances for E-Commerce Sector

INTRODUCTION

The Government of India has notified to implement Tax Collected at Source (TCS) provisions under GST law for e-commerce operators like Myntra, Amazon, Flipkart, Snapdeal, Jabong, etc. from 1st October 2018.
Wherein e-commerce operators required to collect 1% TCS from supplier on the net value of goods or services supplied. Introduction of these provisions increases compliance burden for e-commerce operator but help government in keeping track on tax evasions.

Let’s understand this with the help of an example:                                          

Mr. A is a registered supplier on Myntra, he receives an order for supply of Denim Jeans for Rs 5,000/-. The commission which Myntra charges from supplier is Rs 100/- and the amount of GST is Rs 900/- (i.e., 18%).

Now Myntra will collect TCS amounting to Rs 50/- i.e., @1% on net value of goods supplied through portal (i.e., 5000*1%).
The net amount which shall be paid by Myntra to supplier is Rs 4,850/- (5000-100-50) i.e., after deduction of commission and TCS.
 

GENERAL UNDERSTANDING

We all are well aware that how e-commerce has completely transformed the way of doing business in India and is growing at an unexpected growth rate. The e-commerce platform gives opportunity to various suppliers whether large or small to reach large consumer base worldwide.

E-commerce operators are those who own, manage and operate electronic platform for supply of goods or services on such platform to consumers. The functionality on e-commerce operator’s portal is as under:

• Goods and services of suppliers are displayed on portal through which consumer places the order.
• After placing order, the same shall be supplied by actual supplier to consumer.
• Then payment for such goods or services shall be collected by e-commerce operator from consumer.
• Then such collected amount shall be passed to supplier after deduction of commission by operator.
• From now onwards along with commission, the amount of TCS shall also be deducted by operator while making payment to supplier.
   

REGISTRATION REQUIREMENT

E-commerce operator as well as supplier who is supplying goods through e-commerce operator mandatorily needs to register under GST.

The threshold limit of Rs 20 Lakhs (or Rs 10 Lakhs for North Indian States and Sikkim) shall not be applicable. That is e-commerce operator and supplier compulsorily need to register under GST without considering threshold limit of aggregate turnover.
 

DEPOSITION OF TCS

The amount of TCS which is collected by operator shall be paid to the government up to 10th of following month in which collection is made.

For Example: Myntra sold goods of supplier on its portal in September’2018 amounting to Rs 50 Lakhs and deducted TCS @1% i.e., Rs 50,000/- then the same shall be deposited with government up to 10th October 2018.
 

TCS STATEMENTS

The following statements are required to be furnished by e-commerce operator:

Monthly Statement - GSTR-8 by 10th of following month.

Annual Statement – GSTR-9 by 31st December following the end of every financial year. That is for Financial Year 2017- 2018, GSTR-9 needs to be filed up to 31st December 2018.
 

CREDIT OF TCS

After filing of GSTR-8 by e-commerce operators, the details of the same shall made available to each of the suppliers in Part C of GSTR-2A. The tax collected by operator shall be credited to the cash ledger of supplier and the supplier can claim credit of TCS reflected in the return by operator in his electronic cash ledger.
 

MATCHING OF SUPPLIES DETAILS

• The details of supplies made along with value of such supplies which are submitted by e-commerce operator in its statement shall be matched with the details of supplies which are furnished by suppliers in their respective returns.
• If any discrepancy found while matching, then same shall be communicated to both e-commerce operator and supplier which is to be rectified within the time as given.
• If such discrepancy not rectified in given time, then such amount shall be added to output tax liability of such supplier.
• And the supplier will have to pay the differential amount of output tax along with interest.

Hope this article will be helpful for you. If still you have any questions in your mind or you are falling under this category and need assistance for the same, then feel free to contact us on info@hubco.in or put a query on our contact page.