Tax Collection at Source (TCS) has
similarities with TDS, as well as a few distinctive features. TDS refers to the
tax which is deducted when the recipient of goods or services makes some
payments under a contract etc. while TCS refers to the tax which is collected
by the electronic commerce operator when a supplier supplies some goods or
services through its portal and the payment for that supply is collected by the
electronic commerce operator. We will discuss the exact nature of TCS with an
example. There are many e-Commerce operators [hereinafter referred to as an
Operator], like Amazon, Flipkart, Jabong, etc. operating in India. These
operators display on their portal products as well as services which are
actually supplied by some other person to the consumer. The goods or services
belonging to other suppliers are displayed on the portals of the operators and
consumers buy such goods/services through these portals. On placing the order
for a particular product/service, the actual supplier supplies the selected
product/service to the consumer. The price/consideration for the product/
service is collected by the Operator from the consumer and passed on to the
actual supplier after the deduction of commission by the Operator. The
Government has placed the responsibility on the Operator to collect the ‘tax’
at a rate of 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%. The said amount will be calculated on the net value of the
goods/services supplied through the portal of the Operator. Suppose a certain
product is sold at Rs. 1000/- through an Operator by a seller. The Operator
would deduct tax @ 1% of the net value of Rs. 1000/- i.e. Rs. 10/-.
Registration: The e-Commerce Operator as well as the
supplier supplying goods or services through an Operator need to compulsorily
register under GST. The threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for
special category states) is not applicable to them. Section 24(x) of the CGST
Act, 2017 makes it mandatory for every e-Commerce Operator to get registered
under GST. Similarly, section 24(ix) of the CGST Act, 2017 makes it mandatory
for every person who supplies goods/services through an Operator to get
registered under GST. Power to collect tax: Section 52 of the CGST Act, 2017
provides for Tax Collection at Source, by e-Commerce Operator in respect of the
taxable supplies made through it by other suppliers, where the consideration in
respect of such supplies is collected by him.
TCS Statement: The amount of tax collected by the Operator
is required to be deposited by the 10th of the following month, during which
such collection is made. The Operator is also required to furnish a monthly
statement in Form GSTR-8 by the 10th of the following month. The Operator is
also required to file an Annual statement in prescribed form by the 31st of
December following the end of every financial year. The Operator can rectify
errors in the statements filed, if any, latest by the return to be filed for
the month of September, following the end of every financial year. The details
furnished by the Operator in GSTR-8 shall be made available electronically to
each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the
due date of filing of FORM GSTR-8.
Credit of tax collected: The tax collected by the
Operator shall be credited to the cash ledger of the supplier who has
supplied the goods/services through the Operator. The supplier can claim credit
of the tax collected and reflected in the return by the Operator in his
[supplier’s] electronic cash ledger.
Matching of details of supplies: The
details of the supplies, including the value of supplies, submitted by
every Operator in the statements will be matched with the details of supplies
submitted by all such suppliers in their returns. If there is any discrepancy
in the value of supplies, the same would be communicated to both of them. If
such discrepancy in value is not rectified within the given time, then such
amount would be added to the output tax liability of such suppler. The supplier
will have to pay the differential amount of output tax along with interest.
Notice to the Operator: An officer not below the rank
of Deputy Commissioner can issue Notice to an Operator, asking him to furnish
details relating to volume of the goods/services supplied, stock of goods lying
in warehouses/godowns etc. The Operator is required to furnish such details
within 15 working days. In case an Operator fails to furnish the information,
besides being liable for penal action under section 122, it shall also be
liable for penalty up to Rs. 25,000/-.
