Though TCS (Tax Collected at Source) & TDS (Tax deducted at Source) sounds quite similar, but they are different from each other. In my previous write-up titled” 14 FAQs on TDS under GST applicable from 18th September 2017” , TDS was discussed and in this write-up, TCS will be discussed in detail:
In a layman language, the one who collects tax at source is known as Tax collector. Under GST, every electronic commerce operator (or ‘operator’) has been assigned the role of Tax Collector.
We will discuss the exact nature of TCS with an example. There are many e-Commerce operators [hereinafter referred to as an Operator], like Amazon, Flipkart, Jabong, etc. operating in India. These operators display on their portal products as well as services which are actually supplied by some other person to the consumer. The goods or services belonging to other suppliers are displayed on the portals of the operators and consumers buy such goods/services through these portals. On placing the order for a particular product/service, the actual supplier supplies the selected product/service to the consumer. The price/consideration for the product/ service is collected by the Operator from the consumer and passed on to the actual supplier after the deduction of commission by the Operator. The Government has placed the responsibility on the Operator to collect the ‘tax’ at a rate of 1% from the supplier. This shall be done by the Operator by paying the supplier, the price of the product/services, less the tax, calculated at the rate of 1%. The said amount will be calculated on the net value of the goods/services supplied through the portal of the Operator.
Authorization to collect tax
As per section 52(1) of CGST Act, 2017, Only electronic commerce operator (not being an agent), shall collect an amount of tax in respect of taxable supplies of goods or services or both made through it through other suppliers.
Statutory Provisions of TCS under GST
1. Rate of Tax to be collected
The rate of Tax to be collected by an- commerce operator shall not exceed one per cent, as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies.
As per section 24(x) of CGST Act, 2017, there is no threshold limit to register (like in other cases on Rs. 20 lakh). In other words, every e- commerce operator as well as the supplier who supplies through e- commerce operator has to get itself compulsory registered under GST irrespective of its turnover.
Any person required to collect tax at source, shall electronically submit an application, duly signed or verified through electronic verification code, in FORM GST REG-07 for the grant of registration through the common portal, either directly or through a Facilitation Centre notified by the Commissioner. [Rule 12(1) of CGST Rules, 2017]
3. Credit to be claimed
The tax which is collected by e-commerce operator shall be credited to the supplier who supplies goods or services or both through the operator in his electronic cash ledger and can be claimed by the supplier of which is reflected in the statement of the operator.
4. Statements to be furnished by e-commerce operator
Following two statements are to be furnished by e- commerce operator:
i. Monthly Statement: Every operator who collects tax, shall furnish a statement, 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 within ten days after the end of such month.
|Rule 67 Form and manner of submission of statement of supplies through an e-commerce operator
(1) Every electronic commerce operator required to collect tax at source under section 52 shall furnish a statement in FORM GSTR-8 electronically on the common portal, either directly or from a Facilitation Centre notified by the Commissioner, containing details of supplies effected through such operator and the amount of tax collected as required.
(2) The details furnished by the operator above, 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.
ii. Annual Statement: Every operator who collects tax, shall furnish an annual statement, 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.
|Rule 80(2) Annual return
Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement in FORM GSTR -9B
5. Matching of details of supplier with e- commerce operator
The details of supplies furnished by e- commerce operator (Form GSTR-8) shall be matched with the concerned supplier (GSTR-1).
If the details is not matched, the same shall be communicated to both of them (Supplier in Form GST MIS-3 & e-commerce in Form GST MIS-4)
If the discrepancy is not rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy is communicated, shall be added to the output tax liability of the said supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier and such supplier shall pay the tax payable in respect of such supply along with interest as specified under Section 50(1).
|Section 50(1) Interest on delayed payment of tax
Interest shall be at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.
6. Serving of Notice to the operator
Any authority not below the rank of Deputy Commissioner may serve a notice, requiring the operator to furnish such details relating to:
The concerned operator shall furnish the above mentioned information within fifteen working days of the date of service of such notice. If he fails to do so, 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.
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Author: C S Ekta Maheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at firstname.lastname@example.org
The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.