Accounting entries for ‘Homestay’ E-Commerce, TCS provision & Consequence

Accounting in Case of Homestay

Circular No. 27/01/2018-GST dated 04 Jan 2018 (point no. 5) mentions applicability of threshold limit (of 10 or 20 lakhs under GST Act) to supplier under e-commerce business pertaining to business of “Homestay”. In case of other e-commerce operator registration is Mandatory for all supplier.

Scenario 1 – Assuming that the Homeowner is not liable to get Registered under GST & the liability is on the e-commerce operator

Conclusion :- From above it can be concluded that there is revenue blockage of e-commerce operator to the tune of Rs. 13.50 (i.e. 18% of Rs. 75/-) in case the Homeowners are unregistered Rs. 13.50 will be paid by e-commerce operator & the same to be factored while taking quotation from the Homeowners.

Scenario 2 – Assuming that the Homeowner are Registered Under GST in that case e-commerce operator has to Deduct TCS @1%

Conclusion – Under GST if the e-commerce operator enters into transaction with registered Supplier than the Cash in-flow = Revenue.

CBEC Press Release, the GST Council has recommended on 10 March 2018 to further defer the implementation of the provisions relating to TDS under CGST Act till 30 June 2018. From 01 July 2018

The obligation to collect tax at source has been placed upon E-Commerce Operators (viz., Amazon, FlipKart, Uber, Ola, etc). When an ‘E-Commerce Operator’ receives payment it must collect TCS at the rate to be notified (this rate will not exceed 1%) and pay it to the Government. This rate is to be applied to the ‘net value’ and an agent/supplier (the person who actually supplies the goods via e-commerce portal) is not covered under the TCS provisions to collect TCS. Note:- Supplies made by the e-commerce operator on its own account are not subject to TCS requirements.

(Under E-commerce cash flow for suppliers could see a negative impact because of the TCS as this tax paid will be available as ITC to the supplier on 15th of the next month i.e. cash blockage of 30-45 days.)

Net Value:  Net value has to be ascertained = [(Aggregate Value of Taxable Supplies of Goods + Services)] – (Aggregate Value of Returned Taxable Supplies + Goods)]

Time Period for TCS Tax Payment shall be paid to the Government within 10 days of the following month of collection. An e-commerce supplier has to file GST-8 for TCS & applicable return to a regular dealer i.e. GSTR 1, GSTR 2 & GSTR 3. Plus an Annual Statement, electronically, containing all the details, a. Outward supplies of Goods and Services b. Return of goods and services during the Financial Year before 31st Dec following March of the said FY, also has to be filed.

Exception to Rectification: No rectification will be allowed a. After the due date of furnishing the statement for the month of September following the end of Financial Year, or b. Actual date of Furnishing the Annual Statement, whichever is earlier.

Claim TCS Credit:  Supplier of goods and services can claim the amount of credit in their e-Cash Ledger as collected and reflected by the Operator in Statement mentioned above.

Matching: The Supplies shall match with the corresponding outward supplies of the registered Supplier as the details furnished 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. If the Supplies do not match with the corresponding supplies of the supplier then, such discrepancy shall be communicated to both the persons by the department.

Consequence: Any person committing the offences shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or tax not collected or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.