GST Registration for e-Commerce Collecting TCS under GST

Last Update Date : April 04, 2019
Estimated Read Time: 4 min

Irrespective of sectors, GST has a noticeable impact on each and every business. e-Commerce sector is also not an exception. Registration under GST is mandatory for all e-commerce operators irrespective of the sales turnover. Within 30 days of commencing business, an e-commerce operator is required to get registered under GST.

There can be two types of e-commerce sellers:

  • e-Commerce operators like Flipkart and Amazon; an entity that owns, operates or manages digital platform for e-commerce.
  • e-Commerce suppliers; an entity that supplies goods or services on a digital e-commerce platform.

Provisions of Section 52: Collection of Tax at Source (TCS)

Section 52 is only applicable for ecommerce operators. According to the section:

  • An ecommerce operator needs to collect tax @1% from the supplier This shall be done by the Operator by paying the supplier, the price of the product/services, less the tax, calculated at the rate of 1%.
  • Such withheld amount is to be deposited as TCS by the 10th of the next month.
  • The deposited TCS amount will reflect in the electronic cash ledger of the supplier.
  • This ledger reflects the entire deposits made in cash, and TDS/TCS made on account of the taxpayer on real time basis. And information appearing in this ledger can be utilised for making any payment on account of GST.

Note: Similar to TDS, TCS (Tax Collection at Source) is a mechanism under GST. Here, the ecommerce operator collects a portion of tax from the supplier at the time of supply of goods/services.

Process of GST Registration for e-Commerce

  • Any person who is required to collect TCS will fill the application for registration in FORM GST REG-07 and submit it electronically, either directly or from a Facilitation Centre notified by the Commissioner.
  • The proper officer will grant registration after verification and issue a certificate of registration in FORM GST REG-06 within 3 working days from the date of submission of application.

Insights on GST TCS

  • All the businesses that are supplying services through an ecommerce platform will be liable for TCS.
  • When ecommerce suppliers store their goods at a common warehouse, they must include the details of warehouse as a business place while registering for GST.
  • The calculation and deduction rate of TCS is 1% of the net value of the goods or services supplied through the ecommerce operator.
    For instance, a supplier sells his product worth INR 50,000 through Amazon. The entire amount would be collected by Amazon. This revenue would be transferred to the supplier by Amazon after deducting 1% tax (i.e. INR 500), which is called TCS. This 1% TCS would be remitted to the government. The TCS (INR 500) remitted by the ecommerce operator will be provided as credit to the supplier.
  • 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.
  • The amount which an ecommerce operator deducts as of TCS and remits to the Government is treated as credit while filing GSTR-2 return. Further, at the time of filing GSTR-3 or GSTR-3B return, this can be used to set-off the liability of GST.
  • It is mandatory to file GSTR-8 on monthly basis by the 10th of the next month, and annual return by 31st December following the end of every financial year. It is must to include details of outward supplies made by sellers through ecommerce platform and the amount collected as TCS.

TCS Compliance for e-Commerce Sector

The rate of TCS to be collected is 1% for ecommerce operators. However, any dealers/traders selling goods/services online would get the payment after deduction of 2% tax(i.e, 1% CGST and 1% SGST). Such tax laws result in a lot of increased compliance and administration cost for online aggregators like Amazon, Snapdeal, Flipkart, etc. These parties need to deposit the amount of TCS by the 10th day of subsequent month. Also, it is mandatory for all dealers to get registered under GST even if their turnover is less than INR 20,00,000 to claim deducted tax.

Ms. Rekha is a dealer who sells her ready-made handbags online on Flipkart. She received a bulk order worth INR 25,000 inclusive of all taxes and commission. Here, Flipkart charges a commission worth INR 500 (i.e. 2% TCS). Under GST, Flipkart needs to deduct 2% TCS and 18% GST (i.e. INR 500 and INR 4500).

Note: As per 22nd GST Council meeting held on 6th October 2017, Provisions of TDS & TCS, deferred to 1st April 2018.

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CA Chetan Shinde
CA Chetan Shinde
Chetan is the Lead Tax Advisor at H&R Block (India) with an experience of almost half a decade in audit and taxation. His professional areas of interest are GST advisory and statutory audit. Apart from taxation, he is passionate about social causes and works extensively towards rural school development and literacy.