Tax Collected at Source
As per the GST law, all e-commerce operators need to collect an amount at the rate of 1% on the net value of taxable sales. The amount collected through above means is called as Tax Collection at Source (TCS) which is required to be remitted by e-commerce operator to the government on monthly basis. The seller will be able to utilize the TCS credit to offset their output tax liabilities. TCS provision are effective from October 1, 2018.
What is the TCS Percentage
The rate of Tax Collected at Source: TCS is notified by the Government as 1% on the basic selling price (before GST).
What is the Bifurcation
For Intra-state transactions it is SGST% / UTGST% and CGST% – 0.5% each and for Inter-state transactions it is IGST % – 1%.
TThere is no threshold limit prescribed for TCS and it will be applicable to all taxable products sold on eCommerce Marketplaces.
Transactions not having TCS on Amazon
Orders on listings with Product Tax code as A_GEN_NOTAX and Free replacement orders will not have TCS deductions.
How to Reconcile TCS
TCS collected and paid to the government on behalf of the sellers will reflect in the MTR reports. Sellers will need to refer to the details and file their monthly taxes accordingly.
Does PTC (Product Tax Code) need to be updated
Sellers are recommended to consult with their tax advisor to identify which products are taxable and update the appropriate Product Tax codes to ensure that right GST rates are updated and TCS is deducted.
When will Marketplaces deposit the TCS
Marketplaces will report details of TCS collected in GSTR- 8 by 10th of the following month. Credit of TCS amount will reflect in Seller’s GST electronic cash ledger. The amount can be utilized for discharging output GST liability, interest, penalty, fees or any other amount payable.
TCS Mechanism in case of Refunds or Returns
Marketplaces are required to collect TCS on the ‘net taxable value’ of supplies made by the Seller.Net taxable value is arrived at after reducing the aggregate value of taxable supplies returned to the Seller. Thus, amount of TCS for a particular month would be collected only after adjusting the returns made during the month.