TDS TCS Mechanism under GST

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Tax Collection at Source (TCS under GST) has some similarities with TDS (Income Tax) , as well as has different features also. TDS u...


Tax Collection at Source (TCS under GST) has some similarities with TDS (Income Tax) , as well as has different features also. TDS under Income Tax refers to tax which is deducted when recipient of  goods or services makes some payments under a contract etc. and the payment is above the limits given in TDS Section of Income Tax. while TCS is collected by the e commerce operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the e commerce operator. We will discuss the exact nature of  TCS under GST with an  example. 

There are so many e-Commerce companies [hereinafter referred to as an Operator], like Amazon, Flipkart, Jabong, etc. operating in India. These  operators displays/lists Products as well as services on their portal products which are actually supplied by some other person to the consumer. The goods or services that will be sold by other  suppliers are displayed on the portals of the operators and consumers  buy  such  goods/services through these portals. On placing the order for a particular product/services on the e commerce portal the actual supplier supplies the selected product/services to the consumer. The price/consideration for the product/services is collected by the Operator from the  consumer  and passed  on to the  actual  supplier  after deducting his Commission by the Operator.

Responsibility of collecting the Tax (TCS) at a rate 1% from the supplier is on e commerce operator. The shall be done by paying the supplier price or the services/product, less tax at the rate of 1% and the tax shall be calculated on the net value of product/Services supplied through the portal of the e commerce operator.

Provisions  Related to TCS under GST 

1. Registration:  Registration under GST is mandatory for e Commerce  operator  as  well  as  the supplier  supplying  goods  or  services  through an operator as per Section 24(ix) & Section 24 (x) of CGST Act 2017. And the threshold limit of Rs. 20 lakhs and 10 lakhs for special category states is not applicable to them.

2. Tax Collection Power: AS per Section 52 of the CGST Act, 2017  Tax  Collection  at  source shall be collected by  e-Commerce operator  in  respect  of  the  taxable supplies  made  through it by other suppliers, and the consideration in respect of such supplies is collected by him. 

3. TCS Return Statement:  The  amount  of  tax  so  collected  by  the operator  is  required  to  be  deposited by  the  10th of  the next month, during which such collection is made. The operator is also required to furnish a monthly statement in Form  GSTR-8  by  the  10th   of  the  next  month. The e commerce Operator  is  also  required  to  file  an  Annual  statement in prescribed form by the 31st  of December following the end of  every  financial  year. The e commerce Operator can rectify errors in statements filed, if any, latest by the return to be filed for the month of September, following the end of every financial year.

The details furnished in return by the e commerce operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8 so the supplier can get the credit of tax collected. The tax amount collected by the e commerce operator shall  be  credited  to  the  cash  ledger  of  the supplier  who has supplied the goods/services through the portal of e commerce Operator. The supplier  can  claim credit  of  tax  amount collected and  reflected  in the return by the e commerce Operator in his (supplier’s) electronic cash ledger.

4. Supplies Details Matching: The details of the supplies including the value of supplies, submitted by every e commerce operator in the return statements will be matched and verified with the details/information of supplies submitted by all such suppliers in their returns. If there is any discrepancy/mismatch in the value of supplies, the same would be communicated to both of them. If such discrepancy in value is not  rectified  within  the given  time period,  then  such  amount would be added to the output tax liability of such supplier.  The  supplier  will  liable to pay the differential amount of output tax along with interest.

5. Notice to the e commerce Operator: An officer not below the rank of Deputy Commissioner (DC) can issue notice to an e commerce Operator  asking him to furnish details relating to volume/ Quantity of goods/ products/ services  supplied,  stock  of  goods  lying  in  warehouses/ godowns,  etc.  The  e commerce Operator  is  required  to  furnish  such details  within  15  working  days.  In  case  an  e commerce Operator  fails to  furnish  the  details/information required,  besides  being  liable  for  penal action under section 122 shall also be liable for penalty up to Rs. 25,000/-

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Saral Tax India: TDS TCS Mechanism under GST
TDS TCS Mechanism under GST
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Saral Tax India
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