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GST TCS Mechanism: EximGuru.com


Tax Collection at Source (TCS) has similarities with TDS,as well as a few distinctive features. TDS refers to thetax which is deducted when the recipient of goods orservices makes some payments under a contract etc.while TCS refers to the tax which is collected by theelectronic commerce operator when a supplier suppliessome goods or services through its portal and thepayment for that supply is collected by the electroniccommerce operator. We will discuss the exact natureof TCS with an example. There are many e-Commerceoperators [hereinafter referred to as an Operator],like Amazon, Flipkart, Jabong, etc. operating in India.These operators display on their portal products aswell as services which are actually supplied by someother person to the consumer. The goods or servicesbelonging to other suppliers are displayed on theportals of the operators and consumers buy suchgoods/services through these portals. On placingthe order for a particular product/service, the actualsupplier supplies the selected product/service to theconsumer. The price/consideration for the product/service is collected by the Operator from the consumerand passed on to the actual supplier after the deductionof commission by the Operator. The Government hasplaced the responsibility on the Operator to collect the‘tax’ at a rate of 1% from the supplier. This shall be doneby the Operator by paying the supplier, the price of theproduct/services, less the tax, calculated at the rate of1%. The said amount will be calculated on the net valueof the goods/services supplied through the portal of theOperator.

Suppose a certain product is sold at Rs. 1000/- throughan Operator by a seller. The Operator would deducttax @ 1% of the net value of Rs. 1000/- i.e. Rs. 10/-.Let us have a look at the statutory provisions relatingto TCS.

Registration: The e-Commerce Operator as well asthe supplier supplying goods or services through anOperator need to compulsorily register under GST. Thethreshold limit of Rs. 20 lakhs (Rs. 10 lakhs for specialcategory states) is not applicable to them. Section24(x) of the CGST Act, 2017 makes it mandatory forevery e-Commerce Operator to get registered underGST. Similarly, section 24(ix) of the CGST Act, 2017makes it mandatory for every person who suppliesgoods/services through an Operator to get registeredunder GST.

Power to collect tax: Section 52 of the CGST Act, 2017provides for Tax Collection at Source, by e-CommerceOperator in respect of the taxable supplies madethrough it by other suppliers, where the considerationin respect of such supplies is collected by him.

TCS Statement: The amount of tax collected by theOperator is required to be deposited by the 10th of thefollowing month, during which such collection is made.The Operator is also required to furnish a monthlystatement in Form GSTR-8 by the 10th of the followingmonth. The Operator is also required to file an Annualstatement in prescribed form by the 31st of Decemberfollowing the end of every financial year. The Operatorcan rectify errors in the statements filed, if any, latestby the return to be filed for the month of September,following the end of every financial year.The details furnished by the Operator in GSTR-8 shall bemade available electronically to each of the suppliers inPart C of FORM GSTR-2A on the Common Portal afterthe due date of filing of FORM GSTR-8.

Credit of tax collected: The tax collected by the Operatorshall be credited to the cash ledger of the supplier whohas supplied the goods/services through the Operator.The supplier can claim credit of the tax collected andreflected in the return by the Operator in his [supplier’s]electronic cash ledger.

Credit of tax collected: The tax collected by the Operatorshall be credited to the cash ledger of the supplier whohas supplied the goods/services through the Operator.The supplier can claim credit of the tax collected andreflected in the return by the Operator in his [supplier’s]electronic cash ledger.

Matching of details of supplies: The details of thesupplies, including the value of supplies, submitted byevery Operator in the statements will be matched withthe details of supplies submitted by all such suppliers intheir returns. If there is any discrepancy in the value ofsupplies, the same would be communicated to both ofthem. If such discrepancy in value is not rectified withinthe given time, then such amount would be added tothe output tax liability of such suppler. The supplier willhave to pay the differential amount of output tax alongwith interest.

Notice to the Operator: An officer not below the rank ofDeputy Commissioner can issue Notice to an Operator,asking him to furnish details relating to volume ofthe goods/services supplied, stock of goods lying inwarehouses/godowns etc. The Operator is required tofurnish such details within 15 working days. In case anOperator fails to furnish the information, besides beingliable for penal action under section 122, it shall also beliable for penalty up to Rs. 25,000/-

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