What is TCS under GST?

Author
By Sakshi Shah on February 18, 2019

TCS i.e. Tax Collected at Source under GST became applicable from 1st October 2018. Here is a brief explanation on TCS:

  1. Provisions of TCS are applicable to e-commerce operators.
  2. E-commerce operator is any person who owns and operates a digital platform to run the e-commerce business.
  3. E-commerce suppliers are the persons selling their goods or services using the e-commerce portal.
  4. Payment received from customers for such goods or services is collected by the e-commerce operator.
  5. E-commerce operator is liable to collect TCS @1% on the payment made to e-commerce suppliers.

Example

Mr.X is a registered supplier on Amazon India. He sells goods of Rs.50,000 online to Mr.Y through Amazon for which it charges a 2% commission. Amazon collects the payment from Mr.Y. How will the provisions of TCS be attracted in this case?

Solution

  • Amazon is the e-commerce operator, Mr.X is the e-commerce supplier and Mr.Y is the customer
  • Amazon would collect payment from Mr.Y, collect TCS and make the remaining payment to Mr.X
  • TCS @1% would be collected on Rs.50,000 i.e. the amount inclusive of GST charged on goods and Commission charged by Amazon
  • Amazon would deposit TCS of Rs.500 while filing its GST Return i.e. GSTR-8
  • TCS credit would be populated in GSTR-2A of Mr.X and would be added to his e-cash ledger on the GST Portal

The TCS provisions are not applicable if the following services are provided by the e-commerce platform:

  1. Housekeeping services like plumbing, carpenting etc
  2. Accommodation services by hotels, inns, clubs, guest house etc
  3. Passenger transportation services by radio-taxi, motor cab, motorcycle etc
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