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”.