TCS ON E-COMMERCE OPERATORS UNDER GST
INTRODUCTION :
What is TCS in GST?
TCS in GST means that the E-commerce operators will have to collect the tax from those suppliers who are selling goods or providing services on/through their sites while making payments to such suppliers.
What is meant by E-Commerce?
E-commerce is the buying and selling of goods and services on the internet electronically and making payment electronically or via any other mode. Section 2(44) of CGST Act defines the term ‘e-commerce’ as the supply of goods or services or both, including digital products over digital or electronic network.
Who is an E-Commerce operator under GST?
Section 2 (45) of the CGST Act, defines ‘E-commerce operator’ as any person who owns, operates or manages the digital or electronic facility or platform for e-commerce.
Examples of E-Commerce operators are Flipkart, Amazon, Pay Tm Mall etc.
Who is an E-Commerce Supplier?
An entity that supplies goods or services on a digital e-commerce platform.
APPLICABILITY OF TCS PROVISIONS TO E-COMMERCE OPERATORS
Own website selling own products and other supplier’s products.
TCS Mechanism applicable
- Liability to deduct TCS:
As per provisions of section 52 of the CGST Act, every e-commerce operator, not being an agent is required to collect tax known as TCS on the net taxable value in case a supplier supplies some goods or services through its portal and the payment for that supply is collected by the e-commerce operator.
- Rate of TCS:
An e-commerce operator needs to collect tax @2% (1%CGST+1%SGST) from the supplier on the net taxable value of intra state supply of goods or services supplied through its portal. In case of inter-state supplies of goods or services supplied through e-commerce operator, it is liable to collect tax at a rate of 2% of net taxable supplies vide section 20 of IGST Act.
- Value at which TCS is to be collected:
Tax is to be collected on net taxable value of goods or services supplied by other suppliers through e-commerce operator.
Explanation to section 52(1) clarifies that “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both made during any month by all registered persons through the e-commerce operator as reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.
Further, specified services on which e commerce operator itself is liable to pay GST under section 9(5) is not included in the net taxable value and thus, no tax is to be collected on such amount.
- Credit claim of TCS by the supplier supplying through e-commerce operator :
Section 52(7) of the CGST Act, allows the supplier supplying goods or services or both through the e-commerce operator to take credit of the TCS amount collected in electronic cash ledger
ILLUSTRATION EXPLANING TCS MECHANISM
Facts of the Case:
M/s A2Z Electronics Pvt Ltd (E-commerce Supplier) of Telangana sells Electronic products on Amazon.in (E-Commerce Operator).
A Customer from Gujarat ordered a Television worth Rs.55,000/- and made the payment online.
GST rate on Television is 18%
Commission Amount charged by amazon is 5%.
Explanation on how the operation takes place based on above facts.
Based on the above explanation TCS compliance would strike only when payment is made by E-Commerce Operator to E-Commerce Supplier.
Computation of payment would be as follows:
Invoice Raised by A2Z Electronics Private Limited to Customer
| Particulars | Amount(Rs) |
| Selling Price of Television | 55,000 |
| IGST @ 18% | 9,900 |
| Selling Price (Including GST) | 64,900 |
| Shipping Charges | 0 |
| Total Amount to be paid by Customer | 64,900 |
Payment Settlement by Amazon.in to A2Z Electronics Private Limited.
| Particulars | Amount(Rs) | |
| Total Amount to be Received from | 64,900 | |
| Customer | ||
| Commission deducted by Amazon.in | (5% of Rs.55,000) | (2,750) |
| GST on Commission | (18% of Rs.2,750) | (495) |
| GST TCS | (2% of Rs.55,000) | (1,100) |
| Amount to be paid by Amazon to A2Z | 60,555 | |
| Electronics Private Limited |
