Step by Step Guide

Step 1 Learn how to generate reports from Flipkart Seller Account

Step 2A Learn about TCS under GST on eCommerce with example

Step 2B Filling TCS and TDS credit received under GST 

Step 3 Filling GSTR-1 and GST 3B for eCommerce sellers

Step 4 Matching GSTR-1 and GSTR-8 for eCommerce

TCS under GST With example & Section 52 of CGST Act, 2017

Before we directly jump upon the procedure to claim a TCS refund. We need to analyze the provisions of GST regarding TCS. Understanding why it is collected, what is the rate, and what is the significance of such collection.

So, as usual, starting with definitions. Understanding some common words used in this blog. E-commerce is simply selling goods or services using electronic or digital networks.

Electronic Commerce Operator: It means any person who owns, operates, or manages a digital or electronic facility or platform through which sales are made. Like Amazon, Flipkart.

Electronic Commerce Seller: We all know Amazon, Flipkart never produce goods, all goods are sold by sellers registered with them. A person who sells goods through an E-commerce operator is an E-commerce seller.

Now, moving on to the GST Provisions.

Section 52 of CGST Act, 2017: TCS Mechanism in GST with example

Notwithstanding anything to the contrary contained in this act, every electronic commerce operator not being an agent shall collect an amount not exceeding 1%  on the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. 0.5% for CGST and 0.5% for SGST respectively.

Let us decode this provision by taking the example of Flipkart. and ABC Ltd.

ABC Ltd made sales to customers via Flipkart of Rs. 100,000 and sales returns are Rs. 10,000. Then TCS would be collected on what amount by Flipkart.

See, sales are made via Flipkart by ABC Ltd, instead of directly transferring the money from customers to ABC Ltd. Payments are routing via Flipkart, this is the primary reason Flipkart is collecting TCS.

TCS deduction on Gross or Net Amount

Understanding what is the Net value of taxable supplies or simply net sales, It means the aggregate value of taxable supplies of goods and services or both, other than services notified under Section 9(5), made during any month by the registered persons through the operator, reduced by the aggregate value of taxable supplies returned to it, during the said month.

Now, Understand the meaning of Turnover or Sales, or Taxable Supplies. Turnover never includes any Reverse Charge Inward Supplies always remember in life.

Net Sales: 100,000-10,000 = 90,000 

TCS Amount: 90000*1%= 900

We will always forget to take net sales, so thing from a logical point of view. The sales which would have not been happened(Sales Return), Why would TCS be deducted on such amount?

Take another example: Suppose Gstmentor starts selling books from its own website. Whether TCS would be collected on payment received by the customer to gstmentor.

No, the answer is simply no, since there is no e-commerce operator involved. All the payments will be directly be collected by gstmentor.

TCS under GST from 1st October 2018

Section 52 as read above has been applicable from 1 October 2018 via Notification Number N/N 51/2018 dated 13/09/2018. Before 1st October 2018, there was no liability on eCommerce operators to deduct TCS.

Returns and Collection of TCS

The power to collect the amount shall be without any prejudice to any other mode of recovery from the operator.

Every operator who collects TCS shall furnish a statement, electronically containing, the details as specified below.

  • Details of outward supplies of goods and services or both affected through it.
  • Including the supplies of goods and services or both returned through it.
  • The amount collected(TCS)  during a month in GSTR 8 within ten days of the end of the month.

The amount so collected by the operator shall be paid to the Government within ten days after the end of the month in which such collection, in such manner as prescribed. (GSTR-8)

Example: Flipkart collected TCS of Rs. 2500 for the month of July, such should be submitted to the government by the 10th of August, which would be the due date of GSTR-8.

Rectification of errors of TCS collected by Operators

There are instances when e-commerce operators commit errors in GSTR-8 and the reports generated by them. Such errors are rectified by them in near future. It is provided in GST Act, under subsection (6),

If any operator after furnishing a statement (GSTR-8) discovers any ommissions or incorrect particulars therein,  he shall rectify such omission or incorrect particulars in the statement to be furnished for the month subjection to payment of interest under Section 50(1) (Rate: 18%)

Rectification is allowed up to the 10th of October after the end of the Financial year. However, if the annual return is submitted has been filed before the 10th of October, then the due date is the date of the annual return. Simply earliest of them.

Frequently Asked Questions

Under GST, TCS is collected on the net amount of sales made by the eCommerce sellers through the eCommerce operators. The net sales will not include any reverse charge inward supply received by the seller.

Yes, the TCS so collected can be claimed as a refund by the seller via Statement of TCS and TDS filed on the GST portal.

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