Tax Collected at Source

SECTION : Electronic Commerce

  • Lesson Objectives

    On completion of this lesson, you will be able to understand:

    ·    Mandatory Registration for suppliers

    ·    Tax Collection at source

    ·     Deduction and Remittance of TCS

    ·     Monthly Statement

    ·     Matching of Supplies



    Please go through the Second Video of the Chapter 8.

    As Per Section 24(ix) of the CGST Act, 2017 persons supplying goods or services through e-commerce operator would be liable for registration irrespective of threshold or value of supply made by them.

    ·        Above condition is applicable only when supply is made through such e-commerce operator who is required to collect tax at source (TCS) under section 52 of the CGST Act, 2017.

    ·        However, when E-commerce operator are liable to pay tax on behalf of supplier under a notification issued under section 9(5) of the CGST Act, 2017 in such case supplier of services are entitled for threshold exemption.


    Tax Collection at Source (TCS)

    The E-commerce operator is required to collect (i.e. deduct) an amount out of the consideration paid or payable to the actual supplier of goods or services in respect of supplies of goods and / or services made through such operator. The amount so deducted/collected is called as Tax Collection at Source (TCS).


    The E-commerce Operator is required to collect an amount at the rate of 1%   (0.5%CGST+0.5% SGST) of the net value of Taxable supplies (Total Supplies- Return by customers). TCS will be collected by E-commerce operator if consideration with respect to supplies is collected by Such Operator from customers and transfer to actual supplier.

    Time/ Intervals for deduction by the E-commerce operator

    The timings for such collection/deduction are earlier of the two events:

    (i) The time of credit of any amount to the account of the actual supplier of goods and / or services;

    (ii) The time of payment of any amount in cash or by any other mode to such supplier.


    Remittance of TCS to Government

    The amount collected by the operator is to be paid to the credit of appropriate government within 10 days after the end of the month in which amount was so collected.


    Submission of Statement

    The operator is required to file a Statement, electronically, containing details of all amounts collected by him for the outward supplies made through his Portal, within 10 days of the end of the calendar month to which such statement pertains.


    The said statement would contain the names of the actual supplier(s), details of respective supplies made by them and the amount collected on their behalf. The Form and Manner of the said Statement would be prescribed in the GST Rules.


    Claim of TCS by Actual Suppliers

    TCS which is deposited by the operator into government account will be reflected in the cash ledger of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the operator.


    The same can be used at the time of discharge of tax liability in respect of the supplies by the actual supplier.


    Monthly Statement

    Every E-commerce operator is required to furnish a statement, electronically, of all amounts collected as TCS towards outward supplies of goods and/or services effected through it, during a calendar month within ten days after the end of such calendar month.


    The statement shall contain, inter alia, the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services effected through the operator and the details of such supplies during the said calendar month.


    Matching of Supplies

    The details of supplies and the amount collected during a calendar month, and furnished by every operator in his statement should be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return filed for the same calendar month or any preceding calendar month.

    Mismatch between the Supplies

    Where the details of outward supply, on which the tax has been collected, as declared by the operator in his statement do not match with the corresponding details declared by the supplier the discrepancy shall be communicated to both persons.


    Liability of the Supplier

    The value of a supply relating to any payment in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output liability of the said supplier, for the calendar month succeeding the calendar month in which the discrepancy is communicated.


    The concerned supplier shall, in whose output tax liability any amount has been added shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment.


    Information to the Government

    An officer not below the rank of Joint Commissioner may require the operator to furnish details relating to:

    (i) Supplies of goods / services effected through the operator during any period;

    (ii) Stock of goods held by actual supplier making supplies through such operator in the godowns or warehouses belonging to the operator and registered as additional place of business by the actual supplier.


    Time Limit for furnishing Information

    The operator is required to furnish the above information within 5 working days from the date of service of notice asking such information. In case of failure to furnish such information, the penalty could be extended to Rs. 25,000/- .

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