E-Commerce industry had unique place in GST regime. TCS (Tax collected at source) provisions were incorporated into the GST act, however the provisions were not actively notified.
Now E-Commerce – TCS provisions have been notified by the Government on September 13th, 2018 and will be effective from October 1st of 2018.
Summary of notification:
> A separate registration should be obtained by the E-commerce operators (ECO) for the purpose of TCS provisions.
> E-Commerce operators (ECO) should deduct 2% of TCS on the value of supplies made through its platform and should remit the TCS amount to government on or before 10th of subsequent month.
> E-Commerce operator should also furnish a monthly return with the details of TCS collected on or before 10thof Next month. (GSTR 8)
Going into details:
E-Commerce is nothing but buying and selling of goods and services over the internet. The following two models of E-Commerce are recognised under GST Act.
FAQ on E-Commerce TCS:
Q.1 Are TCS provisions applicable for all..??
Ans: No, they are applicable only for E-Commerce Operators. Not even for all E-Commerce operators, but only for E-Commerce Aggregators.
Q.2 If E-Commerce operator is operating in both Aggregator and Inventory model – what will happen..?
Ans: In that case TCS provisions will be applicable only for sales executed in Aggregator model. For Inventory model sales – there is no requirement of deducting TCS.
Q.3 Is E-Commerce operator required to get registration for TCS..?
Ans: Yes, E-Commerce operator should obtain a separate registration under GST for TCS purpose. He should also file a separate return (GSTR 8) for TCS purpose. He should also remit the TCS amount collected to government on or before 10th of following month.
GSTR 8 will contain following details. (As per the format released by the Govt. previously – it may be subject to amendments now in next few days)
Q.4 What is the percentage of TCS to be deducted and how it is to be calculated..?
Ans: For now TCS is to be deducted at the rate of 2% on aggregate supplies made by vendor through an E-Commerce platform. (Percentage will be confirmed by govt. soon)
> 1% CGST and 1% SGST in case of within the state sales
> 2% of IGST in case of Interstate sales.
It will be calculated on aggregate value of supplies net of sales returns in a month.
Ex: Mr A, has sold goods worth Rs.10,000 through Flipkart platform in a particular month – and Mr. A also charged GST of 18% as 1,800 in the said invoice.
Now Flipkart should deduct 2% of Rs. 10,000 i.e. Rs 200 as TCS and remit it to the government before 10th of next month.
Q.5 In case of Sales returns what should be done..?
Ans: TCS should be deducted on net sales in a month. Which means out of the total sales conducted in a month – sales returns should be deducted and on the net amount TCS should be calculated and deducted.
Q.6 Should ECO obtain state specific registration for each and every state in which he operates..??
Ans: As per the initial provisions of GST, yes ECO should obtain state specific registration in case of operating in multiple states. (However clarity is expected from the government very soon in this aspect in next few days. Already top ECOs have taken their state specific registrations but small ECOs are expected to be significantly affected because of this provision).
FAQs from the government on TCS are expected soon, in which we can get a clarity on rate of TCS and also on state specific registration requirement.
Q.7 What is the impact on sellers selling through ECO platforms..?
Ans: For sellers who are selling thorough platforms like Flipkart and Amazon, there won’t be any additional compliances. However, TCS deducted by the ECO can be taken as credit while making the GST payments.
Q.8 From when the TCS should be collected?
Ans: It will be applicable from sales affected on or after 1st of Oct 2018.