TCS and TDS have some similar and dissimilar features. TDS refers to tax that is deducted when recipient makes some payments under a contract etc. whereas TCS refers to tax which is collected by the e-commerce operator when a supplier supplies through its portal and the payment for that supply is collected by the e-commerce operator.
Let us discuss the exact nature of TCS with an example. There are many e-commerce operators like amazon, Flipkart, Jabong etc. operating in India. These operators display/ list on their portal of the goods/services supplied by some other person to the consumer. The consumer buys such goods/services through these portals. On placing the order for particular goods/services, the supplier supplies the selected goods/services to the consumer. The price/ consideration for the product/services is collected by the Operator from the consumer and passed on to the supplier after deducting his commission by the Operator. It is the operator’s responsibility to collect tax at a rate of 1% from the supplier. The said amont will be calculated on the net value of Good/services supplied through his portal.Say a certain product is sold at Rs. 1000/- through an Operator by a seller. The Operator would deduct tax @ 1% of the net value of Rs. 1000/- i.e. Rs. 100/-.
Statutory provisions
Registration: The ecommerce operator and suppliers supplying goods/services through an operator needs to mandatorily register under section 24 of CGST Act and ignoring the threshold limits provided under section 22 of CGST Act.
Collection: Section 52 of the CGST Act, provides for TCS by e-commerce operator for the taxable supplies made through it by other suppliers, where he collects the consideration in respect of such supplies.
TCS Statement: The operator is required to deposit by the 10th of subsequent month, during which such collection is made along with the monthly statement in Form GSTR-8. Further, an annual return is also required to file a statement in the GSTR-9C by 31 Dec following the end of financial year . The Operator can rectify errors in statements filed (GSTR-8), if any, latest by the return to be filed for the month of September, following the end of every financial year. The details furnished by the operator in GSTR-8 shall be made available to the suppliers in FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8.
Credit of tax collected: The tax collected by the operator shall be credited to the cash ledger of the supplier who has supplied the goods/services through the Operator. The supplier can claim credit of tax collected and reflected in the return by the Operator in his [supplier’s] electronic cash ledger.
Matching of details of supplies: The details of the supplies, including the value of supplies, submitted by every operator in the statements will be matched with the details of supplies submitted by all such suppliers in their returns. If there is any discrepancy 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, then such amount would be added to the output tax liability of such suppler. The supplier will have to pay the differential amount of output tax along with interest.
Notice to the Operator: An officer not below the rank of Deputy Commissioner can issue notice to an Operator asking him to furnish details relating to volume of goods/services supplied, stock of goods lying in warehouses/ godowns, etc. The Operator is required to furnish such details within 15 working days. In case an Operator fails to furnish the information, besides being liable for penal action under section 122 shall also be liable for penalty upto Rs. 25,000/-
The provisions are operationalized since 31.3.2018.
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