GST Registration for E-commerce Collecting TCS under GST

What Is E-Commerce?

E-commerce sellers are businesses or individuals, who through e-commerce platforms such as Amazon, Flipkart, Myntra etc. sell products or services online. These sellers can be manufacturers, distributors, retailers, or even individuals who want to sell their products or services online.

What Is TCS?

"TCS" stands for "Tax Collected at Source." In the Goods and Services Tax system, every e-commerce operator is required to collect 0.5% under the CGST Act and 0.5% under the SGST Act. In the case of inter-state transactions, the E-commerce operator is required to collect 1% on the net values of taxable supplies under the IGST Act.

WHO IS LIABLE TO COLLECT TCS UNDER GST

When making payments, e-commerce operators will collect TCS from the seller. This collection will be considered as a credit for the supplier for supplies made through the online portal. It will be collected on the net value of the taxable supplies.

APPLICABLE RATE UNDER TCS

TCS at the rate of 1% is required to be collected by E-commerce operators, from the sellers for taxable supplies made through their platform. The TCS collected by the e-commerce operator must be deposited with the government and reported in their GSTR-8 return.

Dealers or businesses supplying goods and/or services through e-commerce operators will receive payments after a deduction of TCS at a rate of 1%.

GST REGISTRATION FOR TCS

GST registration is mandatory for e-commerce operators irrespective of their turnover.

REQUIREMENTS FOR TCS REGISTRATION

For Registration as Tax Collector:

1. Applicant has a valid PAN.
2. Applicant must have a valid mobile number.
3. Applicant must have a valid E-mail ID.
4. Applicant must have a place of business.
5. Applicant must have an authorized signatory with valid details.
6. Applicant has to file form GST REG-07 for taking registration as Tax Collector.

TCS RETURN

GSTR-8 is a return filed by e-commerce operators, and it necessitates the deduction of TCS under the GST regime. It includes details of supplies made through the e-commerce platform and the amount of TCS collected on such supplies.

DUE DATE FOR RETURN

The operator is also required to submit monthly details in Form GSTR-8 by the 10th of the following month.

WHERE TO SHOW SALES DETAILS IN GSTR-3B

An ECO is required to report supplies made u/s 9(5) of the CGST Act 2017 in Table 3.1.1(i) of GSTR-3B and shall not include such supplies in Table 3.1(a) of GSTR-3B.

From the View Point of an E-commerce Seller

GST Registration Requirement for E-Commerce

E-commerce sellers are required to obtain GST registration if their annual turnover does not exceed Rs. 40 lakhs (for businesses operating in special category states, the threshold limit is Rs. 20 lakhs). If the E-commerce seller is registered under GST, they must mention their GST registration number on their website and all invoices generated.

According to Notification no. 34/2023-Central Tax dated 31-07-2023, persons who supply goods through E-Commerce Operators are exempted from the liability of taking registration in GST, if they fulfill the conditions as given in this notification.

The amount of aggregate turnover in the previous financial year and the current financial year should not exceed the amount over which a supplier is required to be registered in that State or Union territory as per the provision of section 22 sub-section (1) of the CGST Act. Then in such a case, the person mentioned above is exempted from the liability of taking registration in GST with certain conditions.

1. Such persons will not make any inter-State supply of goods;
2. Such persons will not supply goods through electronic commerce operators in more than one State or Union territory;
3. Such persons will be required to have a Permanent Account Number issued under the Income Tax Act, 1961;
4. such persons  shall,  before  making  any  supply  of  goods  through  an electronic  commerce  operator,  declare  on  the common portal their Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961), the  address of their place of business, and the State or Union territory in which such persons seek to make such supply, which shall be subjected to validation on the common portal;
5. Such persons have been granted an enrollment number on the common portal upon successful validation of the Permanent Account Number declared as per clause (iv);
6. Such persons will not be given more than one enrollment number in any State or Union territory;
7. No supply of goods shall be made by such persons through the electronic commerce operator unless such persons have been provided with an enrollment number on the common portal; And
8. Where such persons are subsequently allowed for registration under section 25 of the Act, the enrollment number will cease to be valid from the effective date of registration.

Collection and Payment of GST

When E-commerce sellers are registered under GST, then they are required to collect and pay GST on the supplies made by them. They must charge GST on the products sold and remit the collected GST to the government within the prescribed time limit.

FILING OF GST RETURNS

Registered E-commerce sellers must file GST returns to report their sales, purchases and tax liability. The frequency of GST return filing depends on the turnover of the e-commerce seller. The GSTR-1 return is required to be filed by e-commerce sellers to report the outward supplies made by them, while the GSTR-3B return is required to be filed to report the summary of sales and purchases and the tax liability.

WHERE TO SHOW SALES DETAILS IN GSTR-3B

A registered person who is making supplies of such services as specified u/s 9(5) through an ECO, shall report such supplies in Table 3.1.1(ii) and shall not include such supplies in Table 3.1(a) of GSTR-3B. The registered person is not required to pay tax on such supplies as the ECO is liable to pay tax on such supplies.

Frequently Asked Questions :-

Q: What is the meaning of E-commerce?
A: Electronic Commerce has been defined in Sec. 2(44) of the CGST Act, 2017 to mean the supply of goods or services or both, including digital products over digital or electronic networks.

Q: Who is an E-commerce Operator?
A : Electronic Commerce Operator has been defined in Sec. 2(45) of the CGST Act, 2017 to mean any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce.

Q: Is it mandatory for an E-commerce operator to obtain registration?
A: Yes. As per Section 24(x) of the CGST Act, 2017 they are liable to be registered irrespective of the value of supply made by them or provide electronic facility or platform. For an E-commerce operator, there is no threshold limit for registration.

Q: What is Tax Collection at Source (TCS)?
A : The e-commerce operator is required to collect an amount at the rate of one percent (0.5%CGST + 0.5% SGST/UTGST) of the net value of taxable supplies made through it, where the consideration with respect to such supplies is to be collected by such operator. The amount so collected is called Tax Collection at Source (TCS).

Q: How can actual suppliers claim credit of this TCS?
A : The amount of TCS paid by the operator to the government will be reflected in the e-cash ledger of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the operator. The same can be used at the time of discharge of tax liability in respect of the supplies made by the actual supplier.

Q: Whether TCS to be collected on exempt supplies?
No, TCS is not required to be collected on exempt supplies.

Q: What is the full form of E-com?
A : E-com is a common abbreviation for electronic commerce.

Q: We purchase goods from different vendors and are selling them on our website under our own billing. Is TCS required to be collected on such supplies?
A : No. According to Section 52 of the TSGST Act, 2017, TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the ECO. In this case, there are two transactions - where you purchase the goods from the vendors, and where you sell it through your website. For the first transaction, GST is leviable and will need to be paid to your vendor, on which credit is available for you. The second transaction is a supply on your own account, and not by other suppliers and there is no requirement to collect tax at source. The transaction will attract GST at the prevailing rates.

Q : What is the full form of RTO in e-commerce?
A : The full form of RTO in e-commerce stands for Return to Origin   i.e. returning a shipped item to the seller's location.

Q: How do I register for GST as an e-commerce operator?
A : To register as an e-commerce operator, an application can be made using REG-07 on the GST portal.

Q: What is the GST rate for e-commerce?
A : The GST rate for e-commerce transactions is the same as the regular GST rate. There is no difference in rate in the case of supply through an e-commerce operator. The rate of tax depends on the type of supply made.

Q : What is the GST registration threshold limit for an E-commerce Operator (ECO)?
A : As per Section 24(x) of the CGST Act, 2017 they are liable to be registered irrespective of the value of supply made by them or provide electronic facility or platform. So, it is always compulsory to get registration for an e-commerce operator.

Q : Example of an Electronic Commerce Operator (ECO)
A : Examples of an Electronic Commerce Operator is Amazon, Flipkart, Myntra etc.

Q : Who is an e-commerce operator?
A : An e-commerce operator is any person who owns, operates, or manages a digital or electronic platform for e-commerce transactions.

Q: What are the GST responsibilities of an e-commerce operator?
A : An e-commerce operator is required to deduct TCS on supplies made through them, pay to the government and file the appropriate return.

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