GST Provisions for Tax Collected at Source ( TCS ) have become applicable since 01-10-2018. Related section, rule, notifications and circulars are as under :
> Section 52 of the CGST Act, 2017
> Rule 85 of the CGST Rules, 2017
> Notification 51/2018-Central Tax– Notified date as 01-10-2018 for implementation of TCS provisions
> Notification 52/2018-Central Tax – Notify rate of collection of TCS on intra-state supply
> Notification 02/2018-Integrated Tax – Notify rate of collection of TCS on interstate supply
> Notification 65/2017-Central Tax– Exemption from compulsory registration for the persons who are making only supply of services through the Electronic Commerce Operator and turnover on all India basis of such supply not exceeding prescribed threshold limit. Such supplies must be other than supplies specified under section 9(5) of the CGST Act.
> Circular 74/48/2018-GST– This circular clarified that TCS shall be deducted, by the Tea Board, on providing services to the sellers ( tea producers ) and on brokerage received from the auctioneers.
> Circular 76/50/2018-GST– This circular clarified that TCS deducted under Income Tax Act shall be part of the taxable value for the purpose of GST.
Detailed Analysis as under:
1. Who is liable to collect TCS under GST?
Electronic Commerce Operator ( Operator ) Not being an agent.
Section 2 (45) of CGST Act defines – ” “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;”
2. On which supply TCS shall be collected under GST?
2.1 Supply made through the portal of the Operator.
2.2 On Net Value of Taxable Supplies and
2.3 Consideration of such supply is collected by the Operator.
For example if the supply has been made through the portal of the Operator but consideration has not been received by the Operator but directly goes to the Supplier account then TCS on such supply shall not be collected and provisions of TCS shall not be applied on such supply.
Both conditions i.e. supply made through the portal of the Operator and consideration of such supply received by the Operator shall be fulfilled to make apply provisions of the TCS.
3. What is Net Taxable Value of Supplies for the purpose of TCS under GST?
For this, explanation to Section 52 (1) of the Act, is reproduced :
“The expression “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9 ( see para 16 for services notified u/s 9(5) ), made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.”
TCS shall be collected on Net Value of Taxable Supplies excluding supplies notified under section 9(5) and excluding aggregate value of taxable supplies returned. For example in the month of March A, the Supplier, made supplies through portal of the Operator B as under:
1) Taxable Supply – Rs.1,00,000.00
2) Supply of goods notified under section 9 (5) – Rs.20,000.00
3) Supply being exempted from tax under GST – 50,000.00
4) Taxable Supply returned – Rs.20,000.00
5) Exempted Supply returned – Rs.10,000.00
6) Total Value of Supply made ( 1+2+3-4-5) = 1,40,000.00
7) Net Value of Taxable Supplies on which TCS is to be collected ( 1-4 )= 80,000.00.
4. What are rates of TCS under GST?
Rate of TCS is 0.5% under each Act i.e. CGST and SGST and the same is 1% under the IGST. Notifications No.52/2018 – Central Tax and 02/2018-Integrated Tax both dated 20th September, 2018 have been issued in this regard.
5. What are the provisions of Registration for the Operator and the Supplier under GST?
> Registration is compulsory required for the Operator according to section 24 (x) of the CGST Act. It (registration) shall be required additional i.e. if the Operator is already registered under GST for regular business, additional registration shall also be required to him for the purpose of TCS.
Such registration shall also be required in each State separately. In order to facilitate the obtaining of registration in each State / UT, the e-commerce operator may declare the Head Office as its place of business for obtaining registration in that State / UT where it does not have physical presence.
It may be noted that each State/UT has indicated one administrative jurisdiction where all ecommerce operators having business (but not having physical presence) in that State/UT shall register. The proper officer for the purpose of registration of ECOs has also been notified by each State/UT.
> For the Supplier also, compulsory registrationis required according to section 24 (ix) of the CGST Act. But as per notification no.65/2017-Central Tax dated 15-11-2017 a person supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an e-commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover not exceeding threshold limit as prescribed under the Act in a financial year.
6. What are provisions for the Foreign E-Commerce Operator?
Where registered supplier is supplying goods or services through a foreign e-commerce operator to a customer in India, such foreign ecommerce operator would be liable to collect TCS on such supply and would be required to obtain registration in each State / UT. If the foreign e-commerce operator does not have physical presence in a particular State / UT, he may appoint an agent on his behalf.
7. On which supplies the Operator shall collect the TCS ?
The Operator shall collect TCS on each and every supply of goods and services made through it and consideration with respect to such supplies shall also be collected by the Operator. Exceptions in this regard are as under:
7.1 TCS is not required to be collected on exempt supplies.
7.2 TCS is not required to be collected on supplies of services notified under section 9 (5) of the Act.
7.3 TCS is not required to be collected on supplies on which the recipient is required to pay tax on reverse charge basis.
7.4 Composition Dealer is not allowed to make supply through the Operator, therefore, question of TCS shall not be arisen.
8. What happened when in a particular period sale return is more than sales ?
It has been cleared by the Government in its FAQ that Negative amount cannot be declared. There will be no impact in next tax period also. In other words, if returns are more than the supplies made during any tax period, the same would be ignored in current as well as future tax period(s).
9. At what time the Operator shall collect TCS ?
The Operator shall collect the TCS once the supply made. For example, if the supply has taken place through the Operator on 30th October, 2018 but the consideration for the same has been collected in the month of November, 2018, then TCS for such supply has to be collected and reported in the statement for the month of October, 2018.
10. What is the time within which such TCS is to be remitted by the Operator to the Government account?
According to the section 52 (3) of the Act the amount collected shall be paid to the Government by the operator within ten days after the end of the month in which such collection is made. Such payment shall only be made through electronic cash ledger.
11. Which statements/returns shall be furnished by the Operator and time to furnish such statements/returns ?
11.1 According to section 52 (4) of the Act the Operator shall furnish a statement in form GSTR-8, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected during a month, within ten days after the end of such month.
11.2 According to section 52 (5) of the Act the Operator shall furnish an annual statement in form GSTR-9B, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected during the financial year, before the thirty first day of December following the end of such financial year.
12. Amendment provisions in regard of rectification of omission and correction in furnished returns.
Section 52 (6) of the Act – If any operator after furnishing a statement in form GSTR-8 discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest, as specified in sub-section (1) of section 50.
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.
13. Claim of credit by the Supplier.
Section 52 (7) of the Act – The supplier who has supplied the goods or services or both through the operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished under sub-section (4) for section 52.
14. Matching Provisions
Section 52 (8) of the Act – The details of supplies furnished by every operator in the form GSTR-8 shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under this Act in form GSTR-1.
Section 52 (9) of the Act – The discrepancies shall be communicated to the both persons i.e. the Operator and the concern Supplier.
Section 52 (10) of the Act – The amount in respect of such discrepancy if had not been rectified earlier, shall be added to the output tax liability of the supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the discrepancy is communicated.
Section 52 (11) of the Act – The concerned supplier, in whose output tax liability any amount has been added under sub-section (10), shall pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of section 50 on the amount so added from the date such tax was due till the date of its payment.
15. Additional Powers to the Authorities of GST towards the Operator.
As per section 52(12) of the CGST Act, 2017, any authority not below the rank of Deputy Commissioner may serve a notice requiring the operator to furnish the details of their supplies of goods or services or both as well as stock of goods held by the suppliers within 15 working days of the date of service of such notice.
Section 52 (14) of the Act – Any person who fails to furnish the information required by the notice served under sub-section (12) shall, without prejudice to any action that may be taken under section 122, be liable to a penalty which may extend to twenty-five thousand rupees.
16. Notified Services under section 9 (5) on which TCS shall not be collected but tax shall be paid by the E-Commerce Operator. NOTIFICATION NO. 17/2017-CENTRAL TAX (RATE), DATED 28-6-2017.
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act;
(iii) services by way of house-keeping, such as plumbing, carpentering etc., except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
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