03 Dec 2018Posted By: Mudit Handa

10 Most Frequently Asked Questions on TCS mechanism under GST

Without a doubt, GST registration is one of the most necessary requirements in all types of business forms. The first year of this newly enforced indirect tax regime has observed massive GST Collections every month, besides the substantial amount of GST refunds already cleared off to numerous taxpayers. Undeniably, there are innumerable benefits of GST registration for increasing ease of doing business. However, there are still a lot of queries in the minds of taxpayers regarding different aspects of GST.

One of them is the provision of Tax Collection at Source (TCS) under GST, which is relevant to all the e-commerce operators having GST registration.

Everyone knows that this is the introductory year of the GST regime. Furthermore, the TCS mechanism under GST has been recently made effective from 1st of October 2018. Naturally, procedural flaws and technical faults might hinder smooth compliance.

Nevertheless, these slip-ups can be easily prevented, through a better understanding of the guidelines of the TCS mechanism in GST.

Here are some of the most frequently asked questions on TCS under GST that will help you get answers to all your queries regarding this concept.


#1. Who is an e-commerce operator as per GST?

U/s. 2(45) of the CGST Act 2017, e-commerce operator refers to a person who possesses, operates or manages an advanced or electronic medium or a portal for e-commerce business.


#2. What is meant by Tax Collection at Source?

As discussed in Section 52 of the CGST Act 2017, an e-commerce operator, excluding an agent, who has GST registration is supposed to collect the amount of GST @ 1% of the total value of taxable supplies where the consideration with regard to the said supplies is to be collected by the e-commerce operator. The sum so collected is known as Tax Collection at Source (TCS).


#3. What amount is the rate of TCS under GST?

The rate at which TCS under GST is to be collected is given below-

  • The Rate of TCS is fixed @ 0.5% as CGST and IGST as per the CGST Act, 2017 and the respective SGST/UTGST Act 2017.
  • TCS rate is fixed @ 1%  u/s 20 the IGST Act, 2017, read with Section 52(1) of the CGST Act 2017.


#4. By what means will TCS apply on the e-commerce operators located outside India?

Despite the fact that overseas e-commerce operators don't have a place of business in India, if their supplier and customers are in India, laws of TCS under GST will still apply on them. Such foreign e-commerce operators will collect TCS on such supplies.


#5. Where will foreign e-commerce operators get a GST registration?

Foreign e-commerce operators who are supposed to collect tax at source would be required to get the GST registration in each State/Union Territory.

  • Very significantly, each State/UT has an administrative jurisdiction.
  • All e-commerce operators (ECOs) having a business (yet not the place of business) in that State/UT will get GST registration in the respective administrative jurisdiction.
  • The proper officer for GST registration of ECOs has additionally been notified in all States/UT.
  • If the foreign e-commerce operator does not have the place of business in the respective State/UT, he may choose to select an agent on his behalf.


#6. Do the e-Commerce operators need to have separate GST registration for TCS?

All the E-Commerce operators need to get separate GST registration for TCS irrespective of the way that the e-Commerce operator is already having a GST registration as a supplier or has a GSTIN. GST Registration for TCS is done through FORM GST REG-07.


#7. How will the actual suppliers be able to guarantee credit of TCS?

The measure of TCS deposited by the ECOs with the Government will be at last reflected in the electronic cash ledger of the actual supplier (i.e. the person on whose account TCS collection has been done) on the basis of GST return filing procedure by the operator in the FORM GSTR-8.


#8. How shall TCS be credited in cash ledger?

  • TCS collected by the e-commerce operator is to be deposited by him under the respective tax head (i.e. CGST/SGST/UTGST/IGST).
  • Based on the GST return filing (i.e. GSTR-8) filed by the ECO, the tax would be credited to the electronic cash ledger of the genuine supplier.


#9. Whether the refund of such TCS credit lying in the ledger would be allowed?

On the off chance that the supplier does not utilize the measure of TCS credit lying in the cash ledger, he may guarantee the refund of the excess balance as per the section 54(1) of the CGST Act, 2017.


#10. Whether TCS payment through Input Tax Credit of the operator is accepted?

No, payment of TCS isn't permitted from the Input Tax Credit of an e-Commerce operator.


In case you need any guidance on GST registration or GST return filing procedure, feel free to contact us at 8881-069-069.

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