GST Registration GST Return
The Goods and Services Tax (GST) regime includes two significant indirect taxes: Tax Deduction at Source (TDS) and Tax Collected at Source (TCS). While primarily governed by the Income Tax Act, these taxes significantly impact GST compliance. TDS is a tax deducted at the source of payment for goods and services, typically withheld from payments like bank deposits, government payments, and contractual payments. TCS, on the other hand, is a tax collected by e-commerce platforms on sales made through their digital platforms for both goods and services, where payments are made digitally. Both TDS and TCS came into effect on October 1st, 2018.
These changes will be effective from 1 April 2025 i.e. for FY 2025-26
Tax Collected at Source (TCS) under GST is a tax levied on e-commerce operators. It is collected on the consideration received by the operator on behalf of sellers who use their online platform to make sales. This tax is calculated as a percentage of the net taxable value of goods or services sold. The provisions governing TCS are specified in Section 52 of the Central Goods and Services Tax Act.
The purpose of implementing TCS in GST can be inferred from its applicability to e-commerce operators. Actually, hundreds and thousands of small sellers sell on these e-trade platforms in today’s time. These e-commerce operators are trade giants who are traceable, and it is easy to impose responsibility on them. Hence, the government made them accountable for collecting a minimum amount in the name of tax before transferring the proceeds to each of these sellers. This will help in tracking all those small sellers who otherwise would have been out of tax authorities' reach. Also, to take the refund of tax so collected, they would file timely returns and disclose business transactions, which will also enhance the compliance procedure under the GST framework.
E-commerce operators like Amazon and Flipkart, which facilitate online transactions for various sellers, are obligated to collect taxes collected at Source (TCS) on behalf of these sellers. This means they deduct a specific percentage of the transaction value as TCS and remit it to the GST authorities before the 10th of the following month using GST TCS Form-8.
For instance, if ABC Stores, a sole proprietorship, sells baby clothes on Snapdeal, the platform must deduct 1% TCS from the sales and pay the remaining amount to ABC Stores.
However, there are exceptions to TCS under Section 9(5) of the GST Act. These include:
The value of a transaction for the purposes of TCS shall be “Net Value of Taxable Supply.” It can be calculated as:
| Particulars | Amount |
|---|---|
| The aggregate monthly value of taxable supplies of goods and/or services [ except under u/s 9(5) on which the E-commerce operator is required to pay complete tax in RCM ] | xxx |
| Less: Monthly value of taxable supply returned | xx |
| Net Value of Taxable Supply | xxx |
For eg:
Say M/s XYZ sold goods through Amazon amounting to? 15 Lakhs and customers made a return for goods amounting to ? 2 Lakhs. In this case, Amazon shall collect tax for M/s XYZ at ? 13 Lakhs i.e., “Net Value of Taxable Supply” computed as under
| Particulars | Amount |
|---|---|
| The aggregate monthly value of taxable supplies of goods and/or services [ except under u/s 9(5) on which the E-commerce operator is required to pay complete tax in RCM ] | 15,00,000 |
| Less: Monthly value of taxable supply returned | 2,00,000 |
| Value of Net Taxable Supply | 13,00,000 |
The Tax Collected at Source (TCS) rate under GST is specified in Section 52 of the Central Goods and Services Tax (CGST) Act, 2018. The Central Board of Indirect Taxes and Customs (CBIC) issues notifications to clarify the TCS rates and applicability.
Currently, the standard TCS rate is 1%. This means that e-commerce platforms must deduct 1% of the gross sales value from sellers and remit it to the government. This 1% is further divided into:
Any amount not collected or collected but not deposited shall attract
What will be the place of supply for E-Commerce operators providing recharge or ticket booking facilities?
For E-Commerce operators like Paytm, which are giving
In such cases, the place of supply will be the address of the customer as per the records of the supplier of service. The provisions regarding the same are given under section 12 (11) of the IGST Act, 2017.
The benefit of threshold exemption under GST can be better understood by categorizing suppliers as
Supplier of Goods
As per section 24(ix) of the CGST Act, 2017, the supplier of goods shall take mandatory registration under GST. No matter the amount of supply made, supplying goods through an e-commerce platform requires registration.
Supplier of Services
A supplier of services can avail of the benefit of threshold exemption. They are required to register if the value of supply exceeds 20 Lakhs ( 10 Lakhs in case of the North Eastern States, excluding J&K). But this benefit is not available to those covered under RCM as per Section 9(5) of the CGST Act, 2017.
In case an operator makes interstate supply or intrastate supplies at multiple places, it would be required to take multiple registrations in each State / Union Territory where it is required to collect the tax. But, to facilitate the same, there is an option to declare the Head Office as its place of business for obtaining various registrations in different States / UT.
E-commerce operators are mandated to register under GST, regardless of whether their suppliers have crossed the GST registration threshold. This obligation arises from their responsibility to collect Tax Collected at Source (TCS) on GST.
To claim the deducted TCS as Input Tax Credit (ITC) or seek refunds, suppliers must also obtain a Goods and Services Tax Identification Number (GSTIN). However, there are exceptions outlined in Section 9(5) of the GST Act. Suppliers with an annual turnover below Rs. 20 lakhs for services or Rs. 40 lakhs for goods are exempt from GST registration.
Furthermore, e-commerce platforms must register for GST in every state where they facilitate the supply of goods or services. This ensures compliance with state-specific GST rules and regulations.
E-commerce platforms are required to deduct TCS on every transaction made during a specific month. This deducted amount must be deposited with the GST authorities within the first 10 days of the following month.
The tax is subsequently transferred by the GST authorities to the:
Under Section 52 of the CGST Act, e-commerce operators are required to collect Tax at Source (TCS) on all transactions. This means they must deduct 1% TCS from payments to sellers on their platforms. This 1% is split as either 1% IGST for interstate sales or 0.5% CGST and 0.5% SGST for intrastate sales. Operators like Amazon, Flipkart, and Snapdeal must remit this collected tax to the GST authorities by the 10th of the following month using Form GSTR-8.
This TCS requirement increases both the cost and administrative burden for e-commerce platforms. Furthermore, even sellers who don't meet the usual GST registration threshold must register to claim credit for these TCS deductions.
Form 24Q is to be filed and submitted for return of tds deducted on salary payments, whereas Form 26Q is to be filed and furnished for tds details on payments other than salary.
Yes, every e-commerce operator has to get mandatory registration under Goods and Service Tax. Section 24(x) of CGST Act 2017 mandates the same irrespective of the value of supply made by such an operator.
The value of net taxable supply must be taken at the GSTIN level and not at a gross level.
In case the returns in a period exceed the outward supply and the resulting Value of Net Taxable Supply is negative, the same shall not be reported. Neither does it have any impact on future periods also.
Yes, after adjusting all your tax liabilities, the remaining amount can be claimed as a refund. The refund provisions as laid down under section 54(1) of CGST Act, 2017 shall apply.
The E-commerce operator is required to file two Goods and Service Tax Returns, which are
Yes, the amount collected as tax from the proceeds to the actual supplier needs to be deposited in a timely manner by the government. Also, if the return by the e-commerce operator is not filed by the due dates, the actual supplier would not be able to claim TCS as his Input Tax Credit in the e-cash ledger.
Yes, though gold is charged to a nominal GST rate of 3% and TCS applicability further reduces the supplier’s margin, it has still not been kept out of TCS applicability. TCS applies to gold normally.
Yes, even if an E-Commerce Operator already has a GSTIN, it would be required to take separate registration for TCS.
If a registered supplier makes a supply in India through a foreign e-commerce operator, such an operator is required to take mandatory registration. The main problem arising, in this case, would be the absence of a business place in India. To resolve the same, an agent in India can be appointed by sucha foreign e-commerce operator.
No, TCS is not required to be collected on exempt supplies.
The question of collecting tax at source from composite dealers does not arise. Because, as per section 10(2)(d) of the CGST Act, 2017, a Composite dealer cannot make supply through an e-commerce operator.
If no consideration for the supply is collected by the E-Commerce operator, he shall not collect any tax at source as per Section 52(1) of CGST Act, 2017.
Supplies on which the recipient is required to pay tax under Reverse Charge are not charged to TCS.
Import falls within the ambit of the Customs Act 1962 and is not covered under GST. Since GST is not in the purview, there is no option for collecting the tax.
