What is TCS (Tax Collected At Source) under GST?

  • Blog|GST & Customs|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 18 January, 2022
The obligation to collect tax at source has been placed upon Electronic Commerce Operators and no other class of suppliers. When an ‘Electronic Commerce Operator’ receives payment (which is 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 Commerce Operator’ is defined as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
Electronic Commerce’ is defined as the supply of goods or services or both, including digital products over digital or electronic network.
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.

Important Terms under TCS:

1. 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.

2. TCS Tax Rate:

Operator shall collect tax @ 1% of the net value of taxable supplies made through it by other suppliers.

3. 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)]

4. Time Period for TCS Tax Payment:

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

5. Manner of Payment: 

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

6. Monthly Statement:

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

7. Annual Statement: 

The operator who collects tax at source shall furnish an annual Statement, electronically, containing all the details, under sub-section (3) of Section 52 of the Act, regarding: a. Outward supplies of Goods and Services b. Return of goods and services during the Financial Year, Before 31st December following the end of such Financial Year.

8. Error in Monthly Statement: 

In case any errors or omissions are detected in the statement by the operator other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities then he shall rectify the same in the statement of month of such discovery, subject to Payment of interest under sub-section (6) of Section 52 of the Act.

9. Exception to Rectification: 

No rectification will be allowed- a. After the due date of furnishing the statement for the month of September following the end of Financial Year, or b. Actual date of Furnishing the Annual Statement, whichever is earlier.

10. How to Claim TCS Credit:

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

11. Matching:

The Supplies shall match with the corresponding outward supplies of the registered Supplier as the details furnished by the Operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of Form GSTR-2A on the Common Portal after the due date of filing of Form GSTR-8 in terms of Rule (2) of Rule 67 read with sub-section (8) of Section 52 of the Act.

12. Not Matching:

When the Supplies under sub-section (4) do not match with the corresponding supplies of the supplier then, such discrepancy shall be communicated to both the persons in terms of sub-section (9) of Section 52 of the Act.

13. Furnishing Details:

Operator upon whom a notice has been served needs to furnish the 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.

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