In what could ease the burden of compliance to GST regulations by e-commerce companies to an extent, the Central Board of Indirect Taxes and Customs (CBIC) has clarified that online retail platforms are not liable to collect TCS (tax collected at source) on supplies made by entities that have turnover not exceeding Rs 20 lakh and are not registered under GST.
As per Goods and Services Tax (GST) provisions, starting October 1, e-commerce companies were mandated to deduct 1 per cent tax collected at source before making payments to their suppliers. The CBIC, in a clarification to the FAQ for TCS dated November 30, said GST law provides that a person supplying services through an e-commerce platform is exempted from obtaining compulsory registration provided his aggregate turnover does not exceed Rs 20 lakh (or Rs 10 lakh in case of specified special category states) in a financial year. “Since such suppliers are not liable for registration, e-commerce operators are not required to collect TCS on supply of services being made by such suppliers through their portal,” the CBIC said. In a separate FAQ, the CBIC said e-commerce operators who could not register themselves for GST but have already collected TCS, can show the amount collected while filing the first return form GSTR-8. “E-commerce operators, who have been unable to obtain registration in the month of October, 2018 but have already collected TCS for the said month, may furnish the details of TCS collected in the month of October, 2018 in the first return in Form GTSR-8 to be filed after obtaining registration,” the indirect tax authority said.
The clarifications come after the e-commerce companies faced troubles in deducting TCS and depositing the same to the government. “Some of these clarifications like no deduction of TCS on supplies by unregistered persons, assigning of an administrative jurisdiction in states where e-commerce players do not have a place of business, were quite sought for by the e-commerce players and should aid easier implementation of this compliance by them,” said Abhishek Jain, tax partner, EY.
Earlier, the CBIC had said e-commerce firms, whether domestic or foreign, would have to register themselves in each state/union territory as the obligation for collecting TCS will be there for every intra-state or inter-state supply. Foreign e-commerce operators, which did not have physical presence in a particular state / UT, were asked to appoint agent on their behalf for it.