Tax collected at source (TCS under GST) is given under section 52 of CGST act.
This section provides the provisions related to collection of tax by e-commerce operators and deposits the same to the government in time limit on behalf of sellers who sell their goods and / or services through their online platform.
There
is no threshold limit of sale, means even if sale is of small amount then also
provision of TCS under GST is applicable.
Let’s
understand in detail the provisions of TCS
under GST under section 52 of CGST:
What is the meaning of TCS under GST?
Tax collected at source (TCS)
under GST is a collection of tax by an e-commerce operator from the
consideration received by it on behalf of supplier of goods or services or
both.
This
provision applies in a situation when a supplier puts their goods or services
on an online platform (i.e. e-commerce operator) for sale.
So
e-commerce operator creates a link between seller and buyer when buyer
purchases the goods or services from an online platform then he makes the
payment to e-commerce operator and not directly to seller and then e-commerce
operator after deducting its commission gives that consideration to seller.
So
in whole such a transaction government puts the liability of e-commerce
operators to collect TCS on behalf of sellers while remitting the
consideration.
Example:
Mr.
A is a seller. He put its goods on Amazon (e-commerce operator) for selling.
Amazon displays their goods to buyers.
Suppose Mr. B
purchases a product and makes the payment to amazon Rs. 10000, so while
remitting the consideration to the seller for Rs.10000, amazon will deduct
its commission charges as well as TCS.
So
in this way the government instead of collecting tax from such individuals
sellers they collect tax on behalf of sellers from the one platform i.e. e-commerce
operator.
Also Read: Section 51 of CGST | TDS under GST | with Example
Who is liable to collect TCS under GST?
E-commerce
operators are liable to collect TCS under GST but following are the few
exceptions of TCS with respect to services provided by an e-commerce operator:
- Hotel accommodation or clubs (in case suppliers are unregistered)
- Transportation of Passengers - radio taxi, motor cab or motorcycle.
- Housekeeping services (in case suppliers are unregistered) Housekeeping services like plumbing, carpentry etc.
What is the rate of TCS under GST?
E-commerce
operators has to collect TCS @ 1% (means 0.5% for CGST and 0.5% for SGST in case
of intra-state and 1% for IGST in case of interstate) means supplier will get
consideration for supply of goods or services or both after deducting TCS @ 1%
.
Whether supplier and e-commerce operator needs to be registered under GST?
The
e-commerce operator is compulsorily liable to get itself registered to collect
TCS.
Every
suppliers who supplies through e-commerce operator needs to get itself
registered except those who make supplies which are notified under section 9(5)
of CGST Act these are:-
- Hotel accommodation or clubs (in case suppliers are unregistered)
- Transportation of passengers – radio taxi, motor cab or motorcycle
- Housekeeping services (in case suppliers are unregistered)
So
if suppliers supply these services then no need to get registered provided they
do not cross the threshold limit of registration.
Also Read: GST- QRMP Scheme (Quarterly Return Monthly Payment Scheme)
What is the due date of depositing TCS under GST?
TCS
under GST should be deposited to the appropriate government account within 10
days after the end of the month in which TCS collected.
Example:
TCS
collected in September month need to be deposited till 10th October from the
end of the September month.
TCS to be deposited to
appropriate government account means:
- For IGST and CGST = Central government
- For SGST = State government
How to take credit of TCS under GST?
Suppliers
whose Tax was deducted can claim credit of TCS.
First
of all, e-commerce operators file GSTR-8 by 10th of the next month in which TCS
was collected. Now the details in GSTR-8 will be shown in GSTR-2A to all
the suppliers. Then suppliers can claim credit of TCS after reconciling their
supplies with GSTR-2A.
If
all the supplies get reconciled with GSTR-2A then suppliers can claim credit of
TCS for those amounts which are reconciled. Tax collected will show in the cash
ledger of the supplier.
Suppose
any discrepancy found while reconciling and that discrepancy not rectified
within the given time period then the amount will be added to the liability of
the supplier. Then he has to pay the difference amount along with interest if
any.
Also Read: Section 194DA: TDS on Life Insurance Maturity Amount
How to calculate TCS under GST?
TCS
will be calculated on Net value of Taxable supplies.
|
Total
value of Taxable supplies of goods and/or services (other than notified
services in section 9(5)) |
---- |
|
Less:
Total value of Returned Taxable supplies of goods and /or services |
----
|
|
Net
Value of Taxable supplies |
---- |
Example:
Mr.
A is a seller. He puts its goods on the Amazon online platform. If Mr. B
purchases goods of Rs 200,000 but returns goods of Rs. 50,000 then Amazon
collects TCS of 1% on Rs 150,000.
TCS
=Rs. 150,000 * 1% = Rs. 1500
So
Mr. A will receive Rs.148500 (Rs.150000-Rs.1500)
(Assuming
Amazon not charging any commission)
Conclusion
Section 52 of CGST Tax collected at source (TCS under GST) provides the provisions related to collection of tax by e-commerce operator @1% on Intra-state and @1% on Interstate while remitting the consideration to sellers. So in this way the government instead of collecting tax from individual sellers, they collect tax from the one platform i.e. e-commerce operator (on behalf of sellers).