TCS on E-Commerce Operators (ECO) under GST

Introduction: This article discusses in detail about Tax collected at source (TCS) on E-commerce under GST.

Query 1. TCS is to be collected on the net taxable value of such supplies in respect of which the ECO collects the consideration.

Please have a look at my query below:

1) Suppose product cost is Rs 1000
2) ECO commission: 10% i.e. Rs 100
3) ECO have to pay 2.5% i.e. Rs 25 to Payment gateway. This Rs 25, ECO will pay from his amount as per point#2
4) Practically, ECO will pay balance Rs 900 to seller.

My question is:

1) How much TCS has to be calculated in this case and on which amount.
2) How much actual amount has to be paid to seller after all taxation from ECO end.
3) Is there any impact of GST% 12% or 18% on TCS?

Would request your comment on the same.

Ans:  Tax Collection at source u/s 52 of CGST Act, 2017

Every ECO [other than an ECO who is required to pay tax under section 9(5)] is required to collect TCS @ 2% (1% CGST  + 1% SGST) of the net value of taxable supplies made through it by other supplier where consideration with respect to a taxable supply is to be collected by such ECO.

As per explanation to section 52,

"Net value of taxable supplies" = Aggregate value of taxable supplies through the operator
Less:  Aggregate value of taxable supplies returned
Less:  Aggregate value of Supplies under Section 9(5)

For further clarity, attention is also invited to explanation to section 51 pertaining to Tax deduction at source.

According to this, the value of  supply shall be taken as the amount excluding the Central tax, State Tax, UT Tax, Integrated Tax and cess indicated in the invoice.

In view of the above,

1. The value of supply is Rs. 1000/- being the aggregate value of Taxable supplies & TCS shall be collect on Rs. 1,000/-

2. The net amount payable to supplier shall be Rs. 1,060/- i.e. {(1000 + 180 (GST @18% assumed rate) - 20(2% of 1000)-100(ECO Commission)}.

3. GST rate of 12% or 18%  will not have any impact on  TCS amount calculation.

Query 2. What if our client sells product worth 1500 Rs. But ECO after deducting it's margin passes only 1200 to our client.

So what would be supply amount for supplier and on what amount TCS would be collected? 

Ans. With reference to above discussion,

1. The value of supply is Rs. 1500/- being the aggregate value of Taxable supplies & TCS shall be collect on Rs. 1,000/-

2. GST shall be paid by the actual supplier on Rs. 1,500/- depending upon the place of supply.

The author is a practicing CA based in Delhi and is registered Insolvency Professional. He can also be reached at cavinodchaurasia@gmail.com

Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.