Tax Collected at Source on E-commerce companies – relevant notifications and FAQs

The Tax collected at source provision becomes effective on E-commerce companies from October 2018. Please find attached the relevant notifications pertaining to TCS provision effective from October 2018. The GST council has also issued the attached FAQ on TCS. A summary of the key clarifications provided in the FAQ is as below:

A. Registration


  • Mandatory registration and threshold exemption: Every e-commerce operator and the person supplying through e-commerce operator is required to obtain compulsory registration irrespective of the value of his supply.  


  • State-wise registration: An e-commerce operator is required to obtain separate registration for TCS in every State/ UT.  Registration mandatory for an e-commerce operator in each state but presence is not mandatory.  Registration can be obtained basis the Head Office being declared as place of business. 


  • Foreign ECO: Where registered supplier is supplying goods or services through a foreign e-commerce operator to a customer in India, such foreign e-commerce operator would be liable to collect TCS on such supply and would be required to obtain registration in each State / UT.  If the foreign e-commerce operator does not have physical presence in a particular State / UT, he may appoint an agent on his behalf. 

B. Levy, collection and rate


  • Rate: Rate of TCS is notified as 1%.


  • Value of net taxable supplies: Value of net taxable supplies is calculated at GSTIN level. 


  • Timing of collection of TCS: TCS is to be collected once supply has been made through the e-commerce operator and where the business model is that the consideration is to be collected by the e-commerce operator irrespective of the actual collection of the consideration.


  • Consequences of non-compliance: Non-collection of TCS will attract interest as well as penalty.


  • Multiple ECOs: In case multiple ECOs’ are involved in supply, the ECO making payment to the supplier will be liable to pay TCS.

C. Payment


  • TCS to be paid within 10 days after the end of the month in which the said amount was collected. 


  • TCS cannot be paid through input tax credit of e-commerce operator. 


  • TCS to be deposited by the operator separately under the respective tax head (CT, ST, IT,UT). 


D. Exemption from levy


  • No TCS to be collected on the following supplies namely: 
  1. exempt supplies
  2. supplies on which the recipient is required to pay under reverse charge mechanism
  3. supplies made by composition tax payer
  4. import of goods or services


  • Further there is no exemption from TCS is granted on Golds. 

E. Furnishing Forms


  • Operator is required to submit a statement electronically containing details of the outward supplies effected through it and the amount collected as TCS during a month within 10 days after the end of such month. 


  • TCS amount deposited will be reflected in the electronic cash ledger of the actual registered supplier on the basis of FORM GSTR-8 filed by the operator. 


  • Operator has to file an Annual statement by December 31 following the end of the financial year in which the tax was collected in FORM GST-9B.


F. Other issues


  • Value of the supplies which are returned may be adjusted from the aggregate value of the taxable supplies made by each supplier. 


  • If the returns are more than supplies made during a tax period, the negative amount should be ignored in current as well as future period as the same will not have any impact. 


  • The address on record of the customer with the supplier of services will be the place of supply for e-commerce operator in the following cases namely:
  1. recharge of recharge of talk time of telecom operator;
  2. recharge of DTH;
  3. in relation to convenience fee charged from customers on booking air tickets, rail supplied through online platform


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