E-commerce operators will be required to register in every state/UT for collection of TCS (tax collected at source) irrespective of whether they are already registered under GST as a supplier or otherwise and have GSTIN, the Central Board of Indirect Taxes and Customs (CBIC) said. Issuing a set of frequently asked questions (FAQs) for e-commerce operators, it said that foreign companies will be liable to collect TCS and can appoint an ‘agent’ on their behalf if they don’t have physical presence in any state.
From October 1, e-commerce companies will have to deduct 1 per cent TCS before making payments to their suppliers.
The amount collected by the operator is to be paid to the government within 10 days after the end of the month in which the said amount was collected. The CBIC said e-commerce companies, whether domestic or foreign, would have to register themselves in each state/UT as the obligation for collecting TCS would be there for every intra-state or inter-state supply.
“In order to facilitate the obtaining of registration in each State / UT, the e-commerce operator may declare the Head Office as its place of business for obtaining registration in that State / UT where it does not have physical presence,” the CBIC said.
Clarifying on when e-commerce operators will have to collect the tax at source, CBIC said TCS is to be collected once supply has been made through the operator and where the business model is that the consideration is to be collected by the operator irrespective of the actual collection of the consideration.
Giving an example, the CBIC said if the supply has taken place through the e-commerce operator on October 30, 2018 but the consideration for the same has been collected in the month of November, then TCS for such supply has to be collected and reported in the statement for the month of October 2018.
The CBIC said every operator will be required to furnish a statement electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected by it as TCS during a month within 10 days after the end of the month in Form GSTR-8. “The operator is also required to file an annual statement by December 31, following the end of the financial year in which the tax was collected in Form GSTR-9B,” it added.
On whether a supplier of goods on e-commerce platform would be entitled to threshold exemption, the CBIC said every person supplying goods through an e-commerce operator shall be mandatorily required to register irrespective of the value of supply made by him. “However, a person supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an e-commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover does not exceed Rs 20 lakh (or Rs 10 lakh in case of specified special category States) in a financial year,” it added.
Abhishek Jain, Tax Partner, EY said, “Some of these clarifications on TCS were long awaited for by the e-commerce industry, like requirement of registration by foreign e-commerce operators. The clarification on choosing the head office as the place of business in the state where the e-commerce operator does not have a presence brings clarity on the registration aspect.”