TCS under GST

TCS Provisions

Legal Provision Under section 52, an Electronic Commerce Operator is liable to collect
TCS only if the supply has been made through such Operator by other
suppliers and the consideration is collected by the Electronic Commerce
Operator. Supplies made by the electronic commerce operator on its
own account are not subject to TCS requirements.

Obligation of The obligation to collect tax at source has been placed upon Electronic
TCS Commerce Operators and no other class of suppliers.

Rate & When an ‘Electronic Commerce Operator’ receives payment (which is

Threshold consideration by another person for a supply made by someone else),
he must collect TCS at the rate to be notified (this rate will not exceed
1%) and pay it to the Government.

This rate is to be applied to the ‘net value’ as defined in the Explanation

to Section 51(1) CGST. An agent is not covered by the TCS provisions

Electronic ‘Electronic Commerce Operator’ is defined as any person who owns,

Commerce operates or manages digital or electronic facility or platform for
Operator electronic commerce.

Electronic ‘Electronic Commerce’ is defined as the supply of goods or services or

Commerce both, including digital products over digital or electronic network.

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Rate of TCS

Services Not Services notified under Section 9(5) of the CGST Act, such as passenger
Notified for E- transport services, housekeeping, accommodation services or restaurant
commerce TCS services, including those provided by cloud kitchens are excluded from
TCS when the operator is already liable to pay tax.

Illustrative Scenario:
Example 1. E-Commerce Operator (ECO): Flipkart Ltd.
2. Supplier: XYZ Pvt. Ltd. (Regular GST registered supplier)
3. Buyer: Mr. A
4. Nature of Supply: Sale of goods (taxable supply)
5. Location of Supplier: Karnataka
6. Location of Buyer: Karnataka (Intra-state supply)
7. Sale Value: ₹1,00,000
8. Applicable TCS Rate (Post 10th July 2024): 0.5% (0.25% CGST + 0.25%
SGST)

Calculation:
• Taxable Value: ₹1,00,000
• TCS Amount: ₹1,00,000 × 0.5% = ₹500
• CGST Component: ₹500 × 0.25% = ₹250
• SGST Component: ₹500 × 0.25% = ₹250

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 Important Terms under TCS

Tax Collector As per Section 52 of CGST Act every Electronic Commerce Operator shall
deduct tax at source on the consideration collected by them where the
supplies are made by other supplier through them. The power to collect
the amount shall be without prejudice to any other mode of recovery
from the operator

TCS Tax Rate Operator shall collect tax upto 1% or the rate as specified of the net value
of taxable supplies made through it by other suppliers.

Net Value Net value has to be ascertained in terms of a formula as provided under
sub-section (1) of Section 52 of the Act.

Net Value of Taxable Supplies = [(Aggregate Value of Taxable Supplies of

Goods + Services) – (Section 9(5) Services)]} – (Aggregate Value of
Returned Taxable Supplies + Goods)]

Time Period for Sub-section (3) of Section 52 of the Act provides that Tax Collected at
TCS Tax Source shall be paid to the Government within 10 days after the end of
Payment the month of collection.

Manner of Any amount Collects as TCS shall be paid by debiting the e-cash ledger
Payment and electronic liability register shall be credited accordingly

Monthly The operator who collects tax shall furnish a statement, electronically,
Statement containing all the details regarding: (a) Outward supplies of Goods and
Services (b) Return of goods and services

GST Return In Form GSTR-8 within 10 days from the end of the month in terms of
sub-rule (1) of Rule 67 of the rules read with sub-section (4) of Section
52 of the act.

• W.e.f. 01-10-2022, Due date of rectification of any omission or incorrect

particulars furnished in GSTR-8to 30th November following the end of
financial year or the actual date of furnishing of annual statement,
whichever is earlier.

How to Claim Supplier of goods and services can claim the amount of credit in their e-
TCS Credit Cash Ledger as collected and reflected by the Operator in Statement
under sub-section (7) of Section 52 of the Act.

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Furnishing Operator upon whom a notice has been served needs to furnish the
Details details within 15 days from the date of Service of such Notice under sub-
section (13) of Section 52 of the Act.

Section 122 of the Act states that any person committing the offences as
stated under the section, shall be liable to pay a penalty of ten thousand
rupees or an amount equivalent to the tax evaded or the tax not
deducted under section 51 or short deducted or deducted but not paid
to the Government or tax not collected under section 52 or short
collected or collected but not paid to the Government or input tax credit
availed of or passed on or distributed irregularly, or the refund claimed
fraudulently, whichever is higher.

CBIC’s 29 FAQs on GST TCS by E-commerce Operators u/s 52 of CGST Act, 2017 (dt. 28 Sept. 2017).

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As per CBIC Circular No. 194/06/2023-GST dt. 17th July 2023, Clarification on TCS liability under Sec
52 in case of multiple E-commerce Operators in one Transaction:

Issue 1: In a situation where multiple ECOs are involved in a single transaction of supply of goods or
services or both through ECO platform and where the supplier-side ECO himself is not the supplier in
the said supply, who is liable for compliances under section 52 including the collection of TCS?

Clarification: In such a situation where multiple ECOs are involved in a single transaction of supply of
goods or services or both through ECO plat form and where the supplier-side ECO himself is not the
supplier of the said goods or services, the compliances under section 52 of CGST Act, including

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collection of TCS, is to be done by the supplierside ECO who finally releases the payment to the supplier
for a particular supply made by the said supplier through him.

Example: Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits
the balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the supplier after
deduction of his fees/ commissions and therefore will also be required to collect TCS, as applicable and
pay the same to the Government in accordance with section 52 of CGST Act and also make other
compliances under section 52 of CGST Act. In this case, the Buyer-side ECO will neither be required to
collect TCS nor will be required to make other compliances in accordance with section 52 of CGST Act
with respect to this particular supply.

Issue 2: In a situation where multiple ECOs are involved in a single transaction of supply of goods or
services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said
supply, who is liable for compliances under section 52 including collection of TCS?

Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making payment to
the supplier for the particular supply being made through it.

Example: Buyer-side ECO collects payment from the buyer, deducts its fees and remits the balance to
the supplier (who is itself an ECO as per the definition in Sec 2(45) of the CGST Act). In this scenario,
the Buyer-side ECO will also be required to collect TCS, as applicable, pay the same to the Government
in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST
Act.

Illustration 6 Peter England is a trader who sells his ready-made clothes online on Amazon India. He
receives an order for `12,000 in the month of April 2024, inclusive of tax and commission 2%. Amazon
charges a commission of `200. Applicable GST `1,800. Find the TCS in the hands of Amazon. Note: there
are sales returns of Peter England products from other customer for `2,000 in the month of April 2024.

Solution: Amazon would therefore need to deduct 1% tax (0.5% CGST and 0.5% SGST towards TCS) on
the amount, excluding the money paid as commission and GST. Amazon would thus be deducting tax
for `80 (1% of `8000).
Working note: ` Supply of goods = 12,000 Less: sales returns = (2,000) Balance = 10,000 Less: GST 18%
= (1,800) Less: Commission = (200) Net value of taxable supplies = 8,000 Tax Collected at Source 1% =
80

Illustration 7: Flipkart Online Services Pvt. Ltd an Electronic Commerce Operator (ECO) has supplied
product ‘A’ from supplier Sri Ram Ltd to various customers aggregating to `50 lakhs for the month of
July 2024. Further there are sales returns of product ‘A’ sold in the month of May, June and July 2024
amounting to `20 lakhs during the month of July 2024. Find the following: (a) Who is liable to pay GST
and TCS? (b) Amount of TCS. (c) Due date of deposit of TCS?

Solution: (a) GST is liable to pay by Sri Ram Ltd. (i.e. supplier of Goods). TCS is required to deposit into
Government account by Electronic Commerce Operator. (b) TCS = `30,000 [(`50 lakhs – 20 lakhs) x 1%]
(c) Due date of deposit of TCS = 10th Aug 2024

In respect of supply of goods made through ECOs by the persons exempted from
obtaining registration in terms of notification issued u/s 23(2):
1. The ECOs shall allow the supply of goods through it, only if enrolment number has been allotted on
the common portal to the said person;
2. He shall not allow any inter-State supply of goods through it;

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3. No tax to be collected at source by the ECOs in respect of the said supply of goods made through it;
4. The ECOs shall furnish the details of supplies of goods made through it in the statement in FORM
GSTR-8 electronically on the common portal

[In case of involvement of multiple ECOs in a single supply of goods through ECO platform, “the
electronic commerce operator” shall mean the ECO who finally releases the payment to the said
person for the said supply made by the said person through him. ]

[Notification No 37/2023-CT dt 04-08-2023]

Unregistered persons with aggregate turnover up to threshold limit permitted to supply goods through
an ECO. If so, exemption provided to such persons not liable to be registered from the provision of
mandatory registration even if they supply through ECO under the following conditions:
He shall not make any inter-State supply of goods
He shall not make supply of goods through ECO in more than one State/UT
He shall declare his PAN, address of his place of business and the State/UT in which he seeks to make
such supply on the common portal before making any supply of goods through ECO and the same shall
be subjected to validation on the common portal;
On successful validation of his PAN he shall be granted an enrolment number in a State/UT
No supply shall be made by such persons through ECOs unless is granted an enrolment number on
the common portal
Once he is granted registration under GST Acts, the enrolment number shall become invalid from the
effective date of registration.
[Notification No 34/2023-CT dt 31-07-2023 w.e.f. 31-07-2023]

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Multiple Choice Questions

1. What is the rate of TDS?

(a) 1%
(b) 4%
(c) 5%
(d) 18%

2. On what value TDS needs to be deducted?

(a) Contract value
(b) Contract value excluding tax
(c) Invoice value including tax
(d) Invoice value excluding tax

3. What is the due date for payment of TDS?

(a) Last day of the month to which payment relates
(b) Within 10 days of the subsequent month
(c) Within 20 days of the subsequent month
(d) Within 15 days of the subsequent month

4. What is the due date for issue of TDS Certificate?

(a) The date of payment of TDS
(b) Within 10 days from the date of payment of TDS
(c) Within 20 days from the date of payment of TDS
(d) Within 05 days from the date of payment of TDS

5. Every registered person required to deduct tax at source under section 51 shall furnish return, in
……………, for the month in which such deductions have been made within 10 days after the end of
such month.
(a) Form GSTR-5
(b) Form GSTR-6
(c) Form GSTR-7
(d) Form GSTR-8

6. What is e-commerce?
(a) Supply of goods and/or services on an electronic platform for commerce other than the e-
commerce operator himself
(b) Supply of goods and/or services on an electronic platform for commerce including the e-commerce
operator
(c) Supply of goods and/or services on an electronic platform for commerce
(d) Supply of goods or services or both including digital products over digital or electronic network.

7. A person who _____ digital or electronic facility or platform for electronic commerce shall be
considered as an e-commerce operator
(a) Owns
(b) Operates
(c) Manages
(d) Any of the above

8. At what rate should the tax be collected at source?

(a) Not exceeding 0.5%

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(b) Not exceeding 1%
(c) Not exceeding 2%
(d) Not exceeding 3%

9. Is there any threshold limit for applying the provisions of Section 52 for collecting tax at source?
(a) TCS applies if net value of taxable supplies exceeds `10,00,000/-
(b) TCS applies if net value of taxable supplies exceeds `15,00,000/-
(c) TCS applies if net value of taxable supplies exceeds `20,00,000/-
(d) No such limit prescribed, tax should always be collected at source if the conditions envisaged u/s
52 are met.

10. When will Section 52 apply? Or when should the e-commerce operator be liable to collect tax at
source?
(a) E-commerce operator shall collect tax at source in respect of all supplies made through it.
(b) E-commerce operator should collect tax at source only if the supplier of the goods and is registered
(c) E-commerce operator shall collect tax at source on the net taxable value of supplies made through
it by other supplier where the consideration with respect to such supply is to be collected by the
E-commerce operator.
(d) E-commerce operator shall collect tax at source only if the net value of taxable supplies exceeds
the prescribed threshold limit.

11. Every electronic commerce operator required to collect tax at source under section 52 shall furnish
a statement in ……………………., containing details of supplies effected through such operator and the
amount of tax collected as required under section 52(1) of the CGST Act.
(a) Form GSTR-5
(b) Form GSTR-6
(c) Form GSTR-7
(d) Form GSTR-8

12. When should the e-commerce operator collect tax at source?

(a) When he collects the consideration on behalf of the supplier in respect of such supply
(b) On the date when the other supplier makes supplies through operator
(c) Day on which the operator remits the consideration to the supplier
(d) Option (a) or (b) whichever is earlier(e) Option (a) or (b) whichever is later
13. When should the e-commerce operator remit the amount of TCS to government and file the
necessary returns with the government?
(a) Within 10 days after the end of the month in which such amount was collected
(b) Within 10 days after the end of the month in which such amount was collected, but no time limit
for filing the return
(c) Within 10 days after the end of the month in which such amount was collected, but no time limit
for paying the money
(d) No time limit for both

14. When can a supplier making supplies through E-commerce operator opt not to register?
(a) Always
(b) When the e-commerce operator is not required to collect tax at source u/s 52
(c) When the supplier doesn’t cross the threshold, limit specified under section 22.
(d) Option (b) and (c), cumulatively fulfilled

15. When an e-commerce operator is required to register under GST?

(a) When he is required to collect tax at source u/s 52

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(b) When his aggregate turnover exceeds the threshold limit
(c) It is mandatory to register irrespective of the threshold limit.
(d) When he is required to collect tax at source u/s 52 and his aggregate turnover exceeds the threshold
limit.

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