TCS Under GST
Introduction : It is important to understand what are the provision for deduction of TCS under GST Law.Basically, this article will describe what are the condition which will trigger the levy of TCS under GST, what will be the rate of deduction, whether there is any exemption (which is provided to specific types of transaction) and how return is required to be furnished along with various due dates.
Relevant provision for applicability of TCS:
Applicability : According, to section 52 of CGST Act, 2017; Certain E-commerce operators are required to collect TCS from consideration received by them towards taxable supply supplied by supplier; following e-commerce operators are not required to collect tax at source. Other then below specified all the e-commerce operators are liable to deduct TCS. This exception has been placed because in all the below provided cases e-commerce operator is liable to tax on reverse charge basis as per section 9(5) of CGST Act, 2017; or as per section 5(5) of IGST Act, 2017.
If any of the e-commerce operator falls under the category then following conditions are required to be checked; Whether supply is taxable supply; if yes, thenWhether consideration is collected by e-commerce operator; if yes Whether such e-commerce operator is supplying in his own capacity, if no; then such e-commerce operator is required to collect TCS at the rate of 1% of consideration received by him.
Illustration : Jamzon is an e-commerce platform has received payment of Rs. 1,20,000/- in respect of goods sold by Mr. Raja. Jamzon operators are of the opinion that TCS is not be deducted as the amount of consideration is not exceeding Rs. 2,50,000/-. Determine whether e-commerce platform is required to deduct TCS?
In the given case opinion expressed by Jamzon and e-commerce operator is incorrect as limit of Rs. 2,50,000/- is applicable only in case of TDS deduction and not on TCS deduction; Therefore, Jamzon is required to deduct TCS at the rate of 1% in case of IGST and 0.5% in case of CGST and 0.5% in case of SGST on Net Taxable Supply.
What if in the given case supply initiated was exempt supply?
In that case TCS will not be deducted as levy is triggered only when such supply is taxable supply.
What if in the given case Jamzon is just sending the buyer from there website to website operated by Mr. Raja?
In that case as Jamzon is not receiving consideration, TCS levy will not be triggered.
What if instead of Jamzon Mr. Raja itself is running website and he is selling goods through such websites?
In that case no TCS will be levied as provision are applicable only in case where supply is made through e-commerce operator not supplying goods/service in his own capacity.
What if in the given case service is been supplied; whether same provisions will be applicable?
There is no difference in applicability of provision as levy of TCS is attracted on taxable supply whether it is goods or service. However, there are few exceptional cases were if specific service is provided then in that case Reverse charge is applicable (Service specified in above chart).
Illustration : Mr. R has supplied the goods through an online platform named sabong.com; the goods supplied in month of June,2020 is of Rs. 3,20,000/- and in month of July, 2020; there is additional supply of Rs.2,50,000/-. In this month here is also return of goods from customer amounting to Rs. 2,00,000/-; Sabong.com is of the opinion that TCS will be collected on entire amount and i.e. on previous month supply and on current month supply without considering amount of return of supply.
In the given case sabong.com is having incorrect opinion as the levy of TCS is applicable on net taxable supply and not on gross taxable supply. Therefore, TCS will be deducted on Rs. 3,20,000/- in month of June, 2020; and on Rs. 50,000/- (after considering return amount of Rs. 2,00,000/-) in month of July, 2020.
Due-Date of payment and Returns/Certificate of deduction:
- The amount of tax deducted in name of TCS is required to be deposited with Government within 10 days after the end of month in which such deduction was made. Delay in deposit will attract interest at the rate of 18% p.a. from due date of payment till actual date of payment of tax to the account of government.
- Due-Date for furnishing GSTR-8 is required to be furnished on or before 10th day of succeeding month from the month in which TCS was required to deducted. Delay in furnishing the return will attract the penalty of Rs. 100/- per day/per act the maximum late fee will be restricted to Rs.5,000/-.
- Details furnished under TCS return will be reflected in GSTR-2A of the supplier and the tax collected will be reflected in electronic cash ledger.
- After filing of GSTR 8 it cannot be revised. Any discrepancy found while matching and reconciling the supply data and GSTR 2A it will be communicated to the operator as well as to supplier. And after the given period of time if such discrepancy is not rectified, then difference of tax amount will be added to the liability of the supplier. The supplier will have to pay the difference along with the interest if any.
Important Clarification relating to registration:
Every e-commerce operator is compulsorily required to take registration, along with this every supplier is also required to take registration however there are certain exceptions this general rule:
If the supplier is engaged in providing service and such service are specified under section 9(5) of CGST Act, 2017; or under section 5(5) of IGST Act, 2017. Then in that case he is only required to registered if his turnover is exceeding; again, here supplier can claim the exemption provided under section 23 of CGST Act, 2017; i.e. in case were assessee is exclusively engaged in supplying goods or service and tax on such supply is paid on reverse charge basis.
Further government had come with notification that if the supplier is supply service (any service provider) on e-commerce platform then he is not required to obtain registration if his turnover is not exceeding the threshold limit specified under section 22 of CGST Act,2017; (i.e. Rs. 20,00,000/- in case of other than special category states and Rs. 10,00,000/- in case of special category state). It is important to note that above exemption is not applicable to supplier of goods. Therefore, irrespective of value of goods supplied through e-commerce operator, such supplier is mandatorily required to obtain registration.