INTRODUCTION: TCS in GST for e-commerce operators is a concept under provisions of GST law introduced in India w.e.f. 1st July, 2017. However, the same was implemented w.e.f. 1st October, 2018. GST is itself an area of concern for most of businessman in India and mixing it with TCS, makes it more confusing for specifically for sellers selling their products through Flipkart, Amazon, Snapdeal, Myntra etc. This article throws light on the eligibility of Refund of GST TCS for sellers selling their products through E-commerce operators, rather than the liability of e-commerce operators to collect GST at source. Further, this article would be more useful for sellers using online platform like Flipkart, Amazon, Snapdeal, Myntra etc. to sell their products, than the academicians / professionals because it does contain provisions in layman’s language without necessarily having reference to the provisions of the GST Act or rules / regulations issued under it. There are many terminologies including TCS, GST etc. which require elaboration for general understanding of the readers.
i. TCS: Tax collected at source: The online portal like Flipkart, Amazon, Snapdeal, Myntra etc. would collect GST at 1% of taxable value of goods / services sold through them, where the payment is also collected by them on behalf of the sellers. TCS will not be expenses for seller but an asset which can be set-off against their GST tax liability, if any, or otherwise can be claimed as refund.
ii. GST: Goods and Service Tax: It is an indirect tax in India implemented w.e.f. 1st July, 2017 to cover indirect taxes on supply of every kind of goods / services with the provision of Input Tax credit of GST paid on input / services / capital goods bought, to remove cascading effect and to establish a chain of transactions to discourage parallel (black) economy.
iii. E-Commerce operators: Electronic Commerce Operator has been defined in Sec. 2(45) of the CGST Act, 2017 to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. For general understanding, Flipkart, Amazon, Snapdeal, Myntra etc. are e-commerce operators.
This article has been complied in the form of Questions and Answers for better and easy understanding of the readers.
i. What is TCS in GST?
Answer: TCS in general terminology means Tax collected at Source. For the purpose of this article, TCS will be deducted by Flipkart, Amazon, Snapdeal, Myntra etc. from the payment collected by them on behalf of online sellers, and will be deposited in Government treasury.
ii. On which amount will this TCS be calculated ?
Answer : TCS will be calculated on the taxable value of products (value before GST) on the net sales done by online sellers through e-commerce operators.
iii. What is the rate of TCS ?
Answer : Rate of TCS is 1%. If the products are sold out of state, then IGST TCS @ 1% will be collected. If the products are sold within state, then CGST TCS @ 0.5% and SGST TCS @ 0.5% (i.e. total 1% TCS) will be collected.
iv. Who will collect such TCS ?
Answer : TCS will be collected (deducted) by e-commerce operators from the payments received by them from retail customers. The payments of products sold through Flipkart, Amazon, Snapdeal, Myntra etc. are collected by such online portal on behalf of sellers and after deducting commission, courier charges, TCS in GST etc. the balance payment is repaid back to the original seller of the product.
v. Whether as a Seller, I need to pay TCS separately or it will be automatically deducted by Flipkart, Amazon, Snapdeal, Myntra etc. ?
Answer: Seller need not pay any GST TCS separately to the Government. The online e-commerce operators will deduct GST TCS @ 1% alongwith other charges like Commission, courier charges etc. from the amount collected from retail customer, and the balance will be repaid back to the seller.
vi. Is TCS so deducted an expense for online seller ?
Answer: TCS is not an expense for online seller. In fact, it is a kind of advance GST deposited on behalf of online seller by e-commerce operator like Flipkart, Amazon, Snapdeal, Myntra etc. And an advance tax like TCS is either adjusted against ultimate GST liability or will be refunded to the online seller.
vii. Can this TCS be adjusted against GST tax liability, which is payable on sale of goods / services ?
Answer: If GST liability is more than the Input tax credit on input / input services / capital goods purchased by online seller, then the TCS can be adjusted against such liability.
viii. Can this TCS so deducted be claimed as refund in bank account of seller ?
Answer: If there is no GST liability after taking Input tax credit on input / input services / capital goods purchased by online seller, then the TCS can be claimed as Refund in Bank account.
ix. How to determine or what is thumb rule on the basis of which I as a seller can determine whether I can get refund of the TCS in my bank account ?
Answer: The below table describes a general understanding on the scenarios under which TCS refund can be claimed in the bank account:
|Tax Rate on Products sold online||GST TCS can refunded in bank account||Reason|
|5%||Yes, TCS can be claimed as refund in bank account.||In this scenario, in most of the cases, GST liability will always be lower than ITC because the GST on Commission / courier charges of Flipkart, Amazon etc. will be 18%, apart from ITC on purchases, expenses etc. leading higher ITC.|
|12%||Yes / No, depending upon the amount of ITC and consequent GST liability.||If ITC is more than GST liability, then TCS refund can be claimed otherwise not.|
|18%||No||In this scenario, GST liability will always be higher than ITC and hence, GST TCS will be instead of claiming as Refund in bank account, will be used to pay net GST liability, meaning thereby that payment towards GST liability will be lesser to the extent of TCS in GST.|
|28%||No||In this scenario, GST liability will always be higher than ITC and hence, GST TCS will be instead of claiming as Refund in bank account, will be used to pay net GST liability, meaning thereby that payment towards GST liability will be lesser to the extent of TCS in GST.|
Note: In above table, even though GST TCS refund cannot be claimed in certain scenarios, however, the same can always be used to reduce net GST liability which is to be paid through bank. Hence, it is always suggested to claim GST TCS through the procedure mentioned hereinafter.
x. What is the procedure to claim this TCS as refund?
Answer: GST TCS can be claimed by filing TDS /TCS Return under GST Portal. After logging in to the GST account in GST Portal (www.gst.gov.in), under Services è Returns è TDS and TCS credit received, after selecting year and month, this return can be filed. Please note that the TCS deducted by e-commerce portals will be automatically reflected under TCS tab of this Return, which, if correct, is to be accepted by the seller. After fling the Return, TCS credit will be automatically credited to the Cash Ledger because TCS deducted is treated as a kind of advance tax in GST and consequently the amount of TCS will be reflected as GST paid in cash after filing of TCS return. Once Cash Ledger is credited, the same balance can be used to either adjust against GST liability disclosed through GSTR-3B or can be claimed as Refund, in case there is not net GST liability payable. For claiming refund, after logging in to GST account in GST portal, the seller needs to go to Services è Refunds è Application for Refund è Refund of Excess Balance in Electronic Cash Ledger. After filing of Refund application, the refund claimed amount will be credited to the bank account registered in GST portal.
xi. Should I, as a seller, should claim Refund of TCS or let it adjust against my GST Tax liability?
Answer: GST TCS is an advance GST deposited in your GSTIN. You can use it the way you want. You can either use to reduce your net GST liability, if any, or it can also be claimed as refund, in case there is no net GST liability after considering ITC on purchases, expenses, commission, courier charges etc.
Conclusion: From the above discussion, it is evident that one should always file TDS and TCS Return under GST so that whatever TCS is deducted on sales through online e-commerce portal, can be claimed as advance tax paid in GST. Once, the same is claimed and credited to the Cash Ledger, the same can be used as per the wish of the seller i.e. either to pay GST liability, if any, or to claim the same as refund in bank account, as excess balance in Cash Ledger.