To reduce the cases of tax evasion, the govt has inserted the provisions of TCS in GST for all sales which are done through e-commerce websites. The provisions of TCS are not yet applicable and would be applicable from a date to be notified by the govt. No date has yet been notified by the Govt.
What is TCS in GST?
TCS in GST means that the e-commerce operator will collect tax at source while making payment to the seller. 1% TCS on GST as per CGST Act and 1% TCS on GST as per the SGST Act makes it a total of 2% TCS on GST in aggregate.
This 2% TCS shall be calculated on the net value of the goods/services supplied through the ecommerce portal.
For eg: – If the net value of goods sold by Mr. A the e-commerce platform Flipkart is Rs. 20,000– Flipkart, then Flipkart should collect TCS @2% while making the payment the Mr. A. Therefore, Flipkart will collect Rs. 400 (2% of Rs. 20,000) and make the balance payment of Rs. 19,600 to Mr. A (Rs. 20,000 – Rs 400)
Mechanism of TCS in GST
In case of e-commerce transactions, the seller lists his goods/services for sale on the e-commerce platform and the buyers purchase the goods/services of his choice by placing an order for the same through the e-commerce platform.
The e-commerce platform collects the payment from the buyer and remits the same to the seller. The e-commerce platform in this case is not the seller and is only collecting the payment from the buyers and remitting the same to the seller.
In some cases, it has been found that the sellers are not properly reporting the sales to the govt. So as to ensure that there is proper reporting of sales, the govt has now placed the responsibility of collecting TCS in GST Regime on the e-commerce platform.
The e-commerce platform will deduct the TCS and deposit the same to the govt. The e-commerce platform would also intimate to the govt the sale which each seller has done on their platform.
Once the e-commerce platform has submitted the details of TCS and the details of the value of goods/services sold by each vendor – the govt would have accurate information of all sales and they would be able to check if the seller has properly reported all the sales.
This would also reduce cases of tax evasion as the govt in this case would be having complete information of all the sales which would have been reported by the e-commerce operator.
The data submitted by the ecommerce operator would be matched with the data submitted by the seller and in case of any discrepancy or variance between these 2 data, the same would be communicated to both of them by the GST Dept.
How to collect TCS in GST?
The ecommerce operator is required to collect TCS @ 1% and deposit the same with the govt by the 10th of the next month during which the payment has been made. The ecommerce operator would also be required to submit a monthly GST Return in Form GSTR 8 by the 10th of the following month and submit an annual GST Return by 31st December of the next financial year.
After the filing of GSTR 8 by the ecommerce operator in GSTR 8, these details would be made visible to all the sellers. The sellers can view the details of the TCS collected by the e-commerce vendor by logging on to the GST Website i.e. www.gst.gov.in and then navigating to Form GSTR 2A. The details of TCS collected by the ecommerce operator would be visible in Part C of GSTR 2A.
The seller can claim the credit of the TCS collected which would reduce his tax payment liability.
It is important to note that it is mandatory for both the e-commerce operator as well as the seller to get registered in GST. Both the seller and the e-commerce operator are mandatory required to get registered under GST irrespective of their turnover. They are even required to register for GST if their turnover is less than Rs. 20 Lakhs/ Rs. 10 Lakhs.
Notice to the ecommerce operator
An Deputy Commissioner or a person above the rank of Deputy Commissioner can issue a notice to the ecommerce operator asking him to furnish details relating to the volume of goods/services supplied, stock of goods lying in the warehouses/godowns etc.
The operator is required to furnish such details within 15 working days. In case an operator fails to furnish the information, he would be liable for penal action as well as for penalty up to Rs. 25,000.
Other Relevant Points regarding TCS in GST
- The seller is required to follow the normal process of return filing i.e. he is liable to file GSTR 1, GSTR 2 & GSTR 3 only.
- The seller is specifically required to disclose the sales made through e-commerce portal in GSTR 1. The GST No. of the ecommerce portal is also required to be furnished in the GSTR 1.
- The ecommerce portal would be specifically required to raise an invoice on the seller for the commission charged by them for selling your product on the e-commerce portal