Tax Collected At Source under GST- Meaning, Registration requirements, their provisions

Last Updated On: Aug. 21, 2020, 10:54 p.m.
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TAX COLLECTED AT SOURCE

Tax Collected at source under GST means the tax collected by an e-commerce operator from the consideration received by it on behalf of the supplier of goods, or services who makes supplies through online platform.

Operators who own, manage, and operate e-commerce online platforms are liable to collect TCS. TCS applies only if the operators collect the consideration from the customers on behalf of vendors or suppliers.

Here are few exceptions to the TCS provisions for the services provided by an e-commerce platform:

a. Hotel accommodation/clubs (unregistered suppliers)

b. Transportation of passengers – radio taxi, motor cab or motorcycle

c. Housekeeping services like plumbing, carpentry, etc. (unregistered suppliers)

The Liability to collect tax arises when e-commerce makes the payment to the vendor. This payment will be the consideration collected on the vendor’s behalf of the supplies made by him via the online portal. This tax will be collected on the net value of taxable supplies.

 

RATE OF TAX COLLECTED AT SOURCE:

The rate is notified by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act.

For an intra-state supply TCS at 1% will be collected, i.e 0.5 % under CGST and 0.5% under SGST. Similarly, for a transaction between the states, the TCS rate will be 1%, i.e under the IGST Act.

 

TCS shall be collected based on these supplies made-

  • Supply made through the portal of the Operator.
  • On-Net Value of Taxable Supplies and
  • Consideration of such supply is collected by the Operator.

NOTE: Supply made through the portal of the Operator and consideration of such supply received by the Operator should be fulfilled for the applicability of provisions of the TCS.

 

TCS shall be collected on Net Value of Taxable Supplies excluding supplies notified under section 9(5) and excluding the aggregate value of taxable supplies returned.

1)  Taxable Supply – Rs.1,00,000.00

2) Supply of goods notified under section 9 (5) – Rs.20,000.00

3) Supply being exempted from tax under GST – 50,000.00

4) Taxable Supply returned – Rs.20,000.00

5) Exempted Supply returned – Rs.10,000.00

6) Total Value of Supply made = 1,40,000.00

7) Net Value of Taxable Supplies on which TCS is to be collected = 80,000.00.

 

Registration Requirements under TCS provisions of GST:

  • The E-commerce operator liable to collect should compulsorily register under GST and there is no threshold limit for exemption. It is also stated that the sellers who are selling on the e-commerce portal have to get registered compulsorily.
  • Every e-commerce operator who is required to collect TCS must mandatorily register under GST
  • Every person who supplies through an e-commerce operator, except those who make supplies notified under section 9 (5) of CGST Act.
  • Also, note that suppliers of services making a supply through an e-commerce platform are exempt from registration if their aggregate turnover is less than Rs 20 Lakhs 
  • Suppliers of goods supplying through an e-commerce platform are not exempt from registration.
  • An e-commerce company must register itself in GST in every state it supplies goods or services to.

 

Due Dates for Depositing TCS:

TCS will be deducted during the month in which the supply is made. It will be deposited within 10 days from the end of the month of supply to the credit of the government. Payment of the tax collected will be made in the following manner :

a. IGST & CGST will be paid to the central government

b. SGST to respective state governments

 

Which Form is used to file TCS returns?

E-commerce operators have to file GSTR-8 by the 10th of the next month in which the tax was collected. This return will only be filed once the tax collected has been deposited to the respective credit of the government.

The details submitted by the operators in GSTR 8 will be available to all the suppliers in GSTR 2A. The supplies will be available GSTR 2A after the due date of filing GSTR-8.

The tax collected will be reflected in the electronic cash ledger of the respective suppliers. The suppliers can claim the credit accordingly after matching and reconciling their supplies with the details in GSTR 2A

GSTR 8 cannot be revised once it is filed. Any discrepancy found while matching and reconciling the supply data and GSTR 2A will be communicated to the operator and the supplier. If the discrepancy is not rectified within the given time period, then the tax amount will be added to the liability of the supplier. The supplier will have to pay the difference along with the interest if any

 

What are the provisions for the foreign E-Commerce Operator?

GSTR 8 cannot be revised once it is filed. Any discrepancy found while matching and reconciling the supply data and GSTR 2A will be communicated to the operator and the supplier. If the discrepancy is not rectified within the given time period, then the tax amount will be added to the liability of the supplier. The supplier will have to pay the difference along with the interest if any.

 

GST Provisions for TCS:

1. Section 52 (7) of the Act-

The supplier who has supplied the goods or services or both through the operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished under sub-section (4) for section 52.

2. Section 52 (8) of the Act –

 The details of supplies furnished by every operator in the form GSTR-8 shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under this Act in form GSTR-1.

3. Section 52 (9) of the Act –

The discrepancies shall be communicated to both persons i.e. the Operator and the concerned Supplier.

4. Section 52 (10) of the Act

The amount in respect of such discrepancy if had not been rectified earlier, shall be added to the output tax liability of the supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the discrepancy is communicated.

5. Section 52 (11) of the Act –

 The concerned supplier, in whose output tax liability any amount has been added under sub-section (10), shall pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of section 50 on the amount so added from the date such tax was due till the date of its payment

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