TCS is the process of tax collection via EC (Electronic Commerce) operator hen goods or services are supplied by a supplier through a portal.
In this case, the supply payment is recovered by ECO (Electronic Commerce Operator).
For instance, the Indian market has many operators of e-commerce such as Flipkart, Jabong, and Amazon etc.
Products as well as services are displayed by these operators on their own portal.
These products/ services are supplied to the consumer by another person.
These goods/ services displayed belong to various other suppliers that are ultimately bought by consumers via these portals.
Once a product or service is ordered via the portal, the real supplier of the selected goods/ service provides the same to the customer.
The price or consideration for the goods or service is actually collected via the portal by Operator.
This price is then given to actual supplier once the commission is deducted by the operator.
The operator has the responsibility of collecting tax from supplier at 1 percent rate, as per the government norms.
The amount is calculated on net value of goods or services supplied to the customer by the operator via the portal.
For instance, a seller sold a product worth Rs. 5000/- to a customer via the operator, the tax deducted by the operator will be @ 1 percent of net value which is Rs. 50/-
Below are the compliances provisions as per TCS
Both the suppliers (of goods or services) as well as e-Commerce operator are required to get mandatory registration certification under the GST as per the Section- 24(x) and Section- 24(ix) of 2017, CGST Act.
Collection of Tax
The power for TCS (Tax Collection at Source) by any registered e-Commerce Operator has been provided by the Section-52 of the 2017 CGST Act. The operator shall collect tax for all taxable supplies that are made to the customer by their actual suppliers. The consideration or tax for the supplies shall be collected by the Operator.
- A registered Operator of an e-commerce portal is required to deposit the tax collected by 10th of following month during which the collection was made.
- Operator shall also be furnishing monthly statements by 10th of following month in the Form GSTR-8.
- Annual statement needs to be filed by the Operator as per the format given by the government.
- The statement should be filed by 1st December, at the ending of each financial year.
- Any errors made in the statement can be rectified by the operator by September month, following ending of each financial year.
- All details shared by the operator in GSTR-8 will be electronically available to each supplier in the Part-C of the Form GSTR-21.
- This information will be shared on the Common electronic portal after the last date for filing Form GSTR-8.
Credit of the tax collected
Once the supplier has provided the goods or services to customer via the operator, he/she shall receive the credit for the collected tax by the e-commerce operator to his/her cash ledger. Tax credit can be claimed electronically by the supplier.
Matching of the supply details
The statement having details and value of the supplies submitted by each e-commerce Operator shall be coordinated and matched with return filed by the supplier having all details of the supplies. In case of any error or discrepancy with respect to volume or value, both will be communicated of the same.
In case the difference is not resolved within specific time period, the quantity related to the difference will be submerged with OTL (output tax-liability) of the supplier. Differential amount along with interest of the output will have to be paid by the supplier.