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E-commerce operators to deduct TCS before paying sellers from Oct 1

After 1st October 2018, all the sellers supplying goods or services through e-commerce operators like Amazon, Flipkart, Jabong etc., will receive payment from operators after deduction of 1% Tax Collected at Source (TCS).

TCS provisions under GST law have been made applicable from 1st October 2018.

Who is an e-commerce operator under GST Law?

E-commerce operator is any person who owns, operates, or manages digital or electronic platform through which traders can supply goods and services to the customers.

Are all e-commerce operators required to register under GST?

Every e-commerce operator must compulsorily register under GST law irrespective of the value of supplies made by him.

They must obtain the registration in every state and Union Territory (UT) where the sellers are located.

If an operator doesn’t have a physical presence in any state or UT, it can declare the head office as its place of business for registering in that state or UT.

Foreign e-commerce operators also have to obtain registration in all states and union territories, where their sellers are located. If they don’t have a physical presence in any state or UT, they can appoint an agent on their behalf to deduct the TCS and file the return.

What are TCS provisions under GST law?

All e-commerce operators must deduct TCS on the net value of supplies made by traders through the e-commerce portal. TCS must be deducted only when instead of the sellers, e-commerce operators receive the consideration for supplies from the customers.

What is Net Value of Supplies?

The aggregate value of taxable supplies of goods and services supplied by a seller in a month through the portal minus the aggregate value of taxable supplies returned by the customers.

In simple words, Net Value of Supplies in a month for a trader is:

Total Sales minus Sales Return

If “A” and “B” are two different sellers supplying goods or services through Amazon, the net value of supplies will be differently calculated for “A” and “B”.

What is the rate of TCS?

On intrastate supply – 0.5% CGST and 0.5% SGST

On interstate supply – 1% IGST

What are the situations where e-commerce operators are not required to deduct TCS?

E-commerce operators don’t have to deduct TCS on –

  • Exempt Supplies,
  • Supplies where the recipient must pay tax under the reverse charge mechanism, and
  • Goods or services imported through the e-commerce operators

What is the due date for e-commerce operators to deposit TCS in Government Treasury?

TCS collected by the e-commerce operator must be deposited in the government treasury within 10 days from the end of the month in which TCS was collected. If TCS isn’t collected or deposited timely, the operator has to pay interest and penalty.

Are E-commerce operators required to file any GST return?

E-commerce operators must file GSTR-8 within 10 days from the end of the month in which TCS was collected. Following details will be mentioned:

  1. Value of sales done through the portal in the month,
  2. Value of sales returns during the month,
  3. TCS amount collected during the month.

Details will be sent GSTIN wise, to keep a record of every seller.

How will the sellers claim the credit of TCS?

TCS amount deposited by the operator will reflect in the electronic cash ledger of the respective seller. When the seller files his GST return, he can claim the credit of TCS amount to offset the GST liability.

Still, have some queries unanswered related to TCS provisions and their applicability on you? Contact Baywiser at or on +919369364646 and we will be happy to assist.

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