FAQ’s ON TCS UNDER GOODS ANDSERVICE TAX (GST)

FAQ’s ON TCS UNDER GOODS AND SERVICE TAX (GST)

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FAQ’s ON TCS UNDER GOODS AND SERVICE TAX (GST)

Q1. What is TCS under GST?

  • Tax Collected at Source under GST means the tax collected by an e-commerce operator form the consideration received by it on behalf of the supplier of goods, or services who makes supplies through operator’s online platform.

Q2. Who is required to collect TCS?

  • The persons who either owns or operates or manages digital or electronic facility or platform for electronic commerce shall be considered as electronic commerce operators.

Combined reading of the above definitions will entail that only companies who are in the business of providing such platform for electronic commerce shall be regarded as electronic commerce operators.

Here are few exceptions to the TCS provisions for the services provided by an e-commerce  platform:

  1. Hotel accommodation/clubs (unregistered suppliers)
  2. Transportation of passengers – radio taxi, motor cab or motorcycle
  3. Housekeeping services like plumbing, carpentry etc. (unregistered suppliers)

Q3. On which transaction TCS is required to be collected?

  • On the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by such operator.

Hence TCS is to be collected if:

  1. Taxable supplies are made through the Operator by other suppliers AND
  2. Consideration with respect to such supplies is collected by the Operator.

Q4. On which value TCS is required to be collected?

  • TCS is required to be collected on the “net value of taxable supplies”.

“Net value of taxable supplies shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9, made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.”

 

zzzNet Value of Taxable Supplies = Aggregate Value of Taxable Supplies                                                                      of Goods +  Services (-)

                                                                   Aggregate Value of Returned Taxable                                                                      Supplies +  Goods

Q5. At what rate TCS will be deducted?

 

  • TCS @1% will be deducted by the e-commerce operators while making payment to the dealers or traders supplying goods/services.

For intra-state supplies – TCS @1% will be collected i.e. 0.5% for CGST and 0.5% for SGST

For inter-state supplies – TCS @1% will be collected i.e. 1% for IGST

Q6. When will the liability for collecting TCS will arise?

  • 52(1) of the CGST Act, 2017 only provides that the amount of tax shall be collected at such rate (1%) of the net value of taxable supplies. Hence the point of collection (i.e. accrual or payment) has not been clearly prescribed. Hence it appears that the TCS shall be collected at the point at which it can be said that the supplies have been made.

Q7. What is the due date for depositing TCS?

  • TCS will be deducted during the month in which supply is made. It must be deposited within 10 days from the end of the month of such supply.

Q8. Which Form is used to file TCS returns?

  • E-commerce operators have to file GSTR-8by 10th of the next month in which the tax was collected. This return will only be filed once the tax collected has been deposited to the respective credit of the government.

Q9. How can TCS return be rectified?

  • As per Sec. 52(6) of the CGST Act, 2017 if any operator after furnishing a return discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest of 18%.

 However no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.

Q10. Is electronic commerce operator required to file annual return?

  • As per Sec. 52(5) of the CGST Act, 2017 every operator who collects the tax shall furnish an annual statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under the said sub-section during the financial year, in such form and manner as may be prescribed, before 31st December following the end of such financial year. Said annual return needs to be filed in FORM – 9B.

Q11. What are the consequences of non -complying with TCS provision?

  • Following are the consequences of non – complying with TCS provision-
  1. TCS not collected– Failure to collect the tax can invite penalty of INR 10,000/- or the amount not collected or short collected, whichever is higher.
  1. TCS collected but not paid to the Government 76 of the CGST Act, 2017 can be invoked by the officer to  recover such TCS along with interest.

  1. Late filing of TCS returns- General penalty up to INR 25,000/- can be imposed u/s 125. It must however be noted that unless the return is filed, the concerned supplier shall not get the credit in his electronic cash ledger.

Other points:

  1. Supply by only registered person is considered. No TCS will be collected if supply form unregistered person.
  2. The collector of tax will be required to registration in every state 2where the concerned suppliers are based.
  3. There is no requirement to indicate TCS on the invoice issued by the concerned supplier.
  4. As on date there is no concept of TCS certificate.

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