TDS &TCS for E- Commerce

Now a days, business of E- commerce are running quite speedily. E-commerce operators are required to

comply with the provision of the laws for smooth running of business. In this article, we have covered the

very specific topic which is TDS & TCS under both laws i.e. GST & Income Tax

Transaction under Income Tax:

Often one may found that, E-commerce operator charges various expenses while settling the transaction

with the business entity like Commission, shipping charges, handing charges etc. This is area where

Business man may fail to deduct the TDS. The consequences of this is that these expenses will be

disallowed while computation of taxable income. Following is the summary for quick compliance.

Natures of transactions	Section	TDS Rate
Commission Fee	194H	5%
Referral Fee	194H	5%
Closing Fee/Fixed Fee	194C	2%
Shipping Fee	194C	2%

 

For ease of doing business generally such operators follows a practice of reimbursement of TDS on the

basis of submission of form 16A. Sometimes it is cumbersome process but such process saves or avoids

TDS penalties and disallowance of expenses paid to e-commerce platforms.

Transaction under Goods and Service Tax

From Oct-18, Provision of TCS is also applicable and the E-commerce operator has to comply it. From

such provision, Cost of compliances is increase which is indirectly lead to increase in working capital of

the business.

According to provision of TCS, The amount collected by an ecommerce operator as GST TCS must be

remitted with the Government before 10 days after the end of the month in which the particular amount

was collected.

From this information Government knows the non-reporting of sales transactions by E-commerce sellers

if any.

For Example: a supplier sells his product worth INR 15000 through Mytra (total amount being 15,000+

GST@18% = 17,700/-). The entire amount would be collected by Mytra. This revenue would be

transferred to the supplier by Mytra after deducting 1% tax (i.e. INR 150), which is called TCS. Net

amount transferred will be INR 17,550/-. This 1% TCS would be remitted to the government. The TCS

(INR 150) remitted by the ecommerce operator will be provided as credit to the supplier.

 

For more information regarding TCS under GST, you can refer our previous article” All about TCS on

GST-E Commerce Companies”.