TCS under GST: Procedural Compliances, Provisions U/s 52 CGST Act
TCS under GST – The GST provisions provide for the applicability of TCS provisions under Section 52 of Chapter X of the CGST Act. Such provisions as of now are only applicable to an E Commerce operator. Now check out more details for “TCS under GST: Procedural Compliances, Provisions U/s 52 CGST Act” from below……
TCS under GST
E -Commerce Operator (U/s 52)
The CGST Act,2017 defines the terms “electronic commerce” and “e commerce operators” under Section 2 as below:- .
“Electronic commerce” means the supply of goods and/or services including digital products over digital /electronic network.
“Electronic commerce operator” means any person who owns/operates/manages digital or electronic facility or platform for electronic commerce.
Provisions U/s 52(1) of the CGST Act
Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the “operator”), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.
Explanation. – For the purposes of this sub-section, 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, 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.
In simple the words the above provisions provide for the following: –
- The e-commerce operator needs to withhold 1 percentage of the amount which is due from him to the supplier at the time of making actual payment to the supplier.
- This is a compulsory levy of tax on “net value of taxable supplies”.
- It has be collected from registered persons/suppliers selling goods through the operator.
- The tax is to be collected only where the consideration for the supply of goods and services made through it is received directly by the operator. Thus, website like OLX or Quickr or JustDial or 99acres has no statutory obligation to collect 1% tax because the consideration here is not received by the operator but the seller himself.
- The “net value of taxable supplies” will include the aggregate value of supplies made through the operator by the registered persons in a month as reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.
- The aggregate value of the notified services on which the e-commerce operator would be liable as supplier liable to pay GST would be excluded.
Value of Taxable Supplies
“Net Value of Taxable Supplies” in a month —
Aggregate Value of Taxable supplies of Goods and/or Services in a month
Services notified U/s(9)(5)
Aggregate Value of Taxable Supplies returned in a month
- The TCS collected is to be deposited by the 10th of the month following the month in which the tax is so collected.
- The amount deposited as TCS will be reflected in the electronic cash ledger of the supplier. The information will be reflected on real time basis. This ledger can be used for making any payment on account of GST.
- A monthly return would be required to be filed for outward supplies made in a month and goods returned in Return Form GSTR-8 by the 10th of the following month.
- The outward supplies and goods returned details for a financial need to be also furnished in the annual return filed for such financial year.
- The matching provisions are applicable and the statement furnished by the e-commerce operator would be matched with the return of outward supplies of the supplier.
- The proper officer is empowered to require the operator via a notice prescribed information including the supplies made and information on stock of goods held. Any information requisitioned would be required to be replied within 15 days of notice served and any non-compliance of furnishing requisitioned information may entail penalty which may extend to Rs. 25000/-
Power to requisition information
- Proper officer empowered to require via a notice to furnish prescribed information including the supplies made and information on stock of goods held.
- Non compliance of information requisitioned within specified period in notice served may entail penalty which may extend to Rs. 25000/-
- The explanation in Sec 52(1) for “net value of taxable supplies” doesn’t clarify that the value of goods will be inclusive of GST or not. If included this will lead to a cascading effect.
- E-Commerce Operator to face compliance burden. Will affect small companies with compliance burden as both operator and supplier will have to maintain records, specially the operators who have to keep record for thousands of suppliers.