Tax Collection at source in GST


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What is Electronic-Commerce?

As per section 2(44) of the CGST Act, 2017, ‘Electronic Commerce’ means the supply of goods or services or both over digital or electronic network.

Who is Electronic Commerce Operator?

As per section 2(45) of the CGST Act, 2017, ‘Electronic Commerce Operator’ means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce

Analysis:

Every E-Commerce transaction involves 3 below parties and two types of transaction:

1. Seller;

2. Buyer;

  • E-Commerce Operator

Types of transactions:

1. Between Seller & Buyer- Sale of Goods

2. Between Seller & E-Commerce Operator- Provision of market place

Brief taxability under GST:

Between Seller & E-Commerce Operator: GST on commission value/Other charges earned by ECO

Registration of Seller:

1. U/s 22(1) of the CGST Act, 2017, Every supplier shall be liable to be registered, if his aggregate turnover in a financial year exceeds 20 lakhs (10 lakhs in case of special category states)

(Unless and until such person is engaged exclusively in supply of goods or services that are not liable to tax or wholly exempt from tax)

2. However, persons who supply goods through electronic commerce operator which collects TCS u/s 52 is required to obtain compulsory registration irrespective of aggregate turnover.

  • Persons engaged in exclusive supply of following services are not liable to registration as tax on supply of such services is paid by electronic commerce operator u/s 9(5)

[Section 24(ix)]

1. Services by way of transportation of passengers by radio-taxi, motor cab and motor cycle

2. Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites, or other commercial places meant for residential or lodging purposes except if turnover crosses above threshold of 20/10 lakhs

3. Services by way of house-keeping, such as plumbing, carpentering etc except if turnover crosses above threshold of 20/10 lakhs

[Notification No 17/2017- CT (Rate)]

Registration of Electronic Commerce operator:

Compulsory Registration:

1. Electronic Commerce operator who is required to collect tax u/s 52

2. Electronic commerce operator who is required to pay tax under section 9(5)

Collection of Tax U/s 52: (w.e.f October 1, 2018)

Electronic Commerce operator is required u/s 52 of the CGST Act, 2017, to collect tax at 0.5% on the net value of taxable supplies during month by registered persons [i.e., taxable supplies less return & other than supplies of 9(5)] where consideration is collected by the operator

[Notification No 51/2018- Central Tax] & [Notification No 52/2018- Central Tax]

Analysis:

1. TCS not required on supplies which are not leviable to tax under the GST (required only on taxable supplies)

2. TCS not required for supplies on which tax is paid by electronic commerce operator u/s 9(5)

  • TCS is not required on supplies which are returned by the buyers

1. Consideration should be collected by the electronic commerce operator to levy TCS

2. Seller should be registered person

Payment deadline for Electronic Commerce Operator:

Tax collected by ECO is required to be deposited by 10th of the succeeding month (Form GST PMT-06).

The amount is required to be paid in cash only & balance in credit ledger cannot be used & shall be available to the seller in his Electronic Cash Ledger. 

Filing of statement by Electronic Commerce Operator (Section 52 & Rule 67):

Every operator who collects tax is required to furnish a statement, electronically, containing the details of Outward supplies of goods or services or both effected through it, including supplies of goods or services or both returned through it, and the amount collected by way of tax by 10th of the succeeding month (Form GSTR-8).

The details are then available to the supplier for claiming in his cash ledger


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