TCS on E-Commerce Operators (ECO) under GST

[CA.VINOD CHAURASIA]

Introduction: This article discusses in detail about Tax collected at source (TCS) on E-commerce under GST.

 Query 1.  TCS is to be collected on the net taxable value of such supplies in respect of which the ECO collects the consideration.

Please have a look at my query below:

1) Suppose product cost is ₹ 1000

2) ECO commission: 10% ie. ₹ 100

3) ECO have to pay 2.5% ie. ₹ 25 to Payment gateway. This ₹ 25, ECO will pay from his amount as per point#2

4) Practically, ECO will pay balance ₹ 900 to seller.

My question is:

1) How much TCS has to be calculated in this case and on which amount.

2) How much actual amount has to be paid to seller after all taxation from ECO end.

3) Is there any impact of GST% 12% or 18% on TCS?

Would request your comment on the same.

Ans :  Tax Collection at source u/s 52 of CGST Act, 2017

Every ECO [other than an ECO who is required to pay tax under section 9(5)] is required to collect TCS @ 2% (1% CGST  + 1% SGST) of the net value of taxable supplies made through it by other supplier where consideration with respect to a taxable supply is to be collected by such ECO.

As per explanation to section 52,

“Net value of taxable supplies” = Aggregate value of taxable supplies through the operator

                                                                 Less:  Aggregate value of taxable supplies returned

                                                                Less:  Aggregate value of Supplies under Section 9(5)

For further clarity, attention is also invited to explanation to section 51 pertaining to Tax deduction at source.

According to this, the value of  supply shall be taken as the amount excluding the Central tax, State Tax, UT Tax, Integrated Tax and cess indicated in the invoice.

In view of the above,

1. The value of supply is ₹ 1000/- being the aggregate value of Taxable supplies & TCS shall be collect on ₹ 1,000/-

2.  The net amount payable to supplier shall be ₹ 1,060/- i.e. {(1000 + 180 (GST @18% assumed rate) - 20(2% of 1000)-100(ECO Commission)}.

3.  GST rate of 12% or 18%  will not have any impact on  TCS amount calculation.

Query2.      What if our client sells product worth 1500rs. But ECO after deducting it's margin passes only 1200 to our client.

So what would be supply amount for supplier and on what amount TCS would be collected?

Ans.  With reference to above discussion,

1. The value of supply is ₹ 1500/- being the aggregate value of Taxable supplies & TCS shall be collect on ₹ 1,000/-

2. GST shall be paid by the actual supplier on ₹ 1,500/- depending upon the place of supply.

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The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at [email protected] , Mob. +91 9953587496.