Electronic Commerce Operator and Tax Collected at Source : GST

Recently I got a query from person on concept of E-Commerce Operator, so I have tried explaining the concept ofElectronic Commerce Operator and Tax Collected at Source through this article.

Electronic Commerce means the supply of goods or services or both, including digital products over digital or electronic network.

Electronic Commerce operator is a person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

For Example Studycafe is a E-Commerce Operator where by activity of E-Commerce i.e. buying and selling lectures take place.

Electronic Commerce Operator and Tax Collected at Source : GST

Registration

As per section 24(x) of the CGST Act, 2017, every electronic commerce operator has to obtain compulsory registration irrespective of the value of supply made by him. The benefit of threshold exemption is not available to e-commerce operators.

E-Commerce operator has to obtain separate registration for TCS irrespective of the fact whether eCommerce operator is already registered under GST as a supplier or otherwise and has GSTIN.

However, a person supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an ecommerce platform are exempted from obtaining compulsory registration provided their aggregate turnover does not exceed INR 20 lakhs (or INR 10 lakhs in case of specified special category States) in a financial year. Government has issued the notification No. 65/2017 Central Tax dated 15th November, 2017 in this regard.

Step Taken by Government for Ease of E-Commerce Operator

As per the extant law, registration for TCS would be required in each State / UT as the obligation for collecting TCS would be there for every intra-State or inter-State supply.

In order to facilitate the obtaining of registration 161 in each State / UT, the e-commerce operator may declare the Head Office as its place of business for obtaining registration in that State / UT where it does not have physical presence.

It may be noted that each State/UT has indicated one administrative jurisdiction where all ecommerce operators having business (but not having physical presence) in that State/UT shall register.

The proper officer for the purpose of registration of ECOs has also been notified by each State/UT.

Rate on which TCS is supposed to be calculated

Rate of TCS is 0.5% under each Act (i.e. the CGST Act, 2017 and the respective SGST Act / UTGST Act respectively) and the same is 1% under the IGST Act, 2017. Notifications No. 52/2018 Central Tax and 02/2018 Integrated Tax both dated 20th September, 2018 have been issued in this regard. Similar notifications have been issued by the respective State Governments also.

Accounting Concept of GST TCS

I have explained the completed accounting concept of TCS through an example.

Suppose Studycafe is selling a lecture of Mr XYZ teacher amounting to Rs. 10,000/-. The GST applicable on that lecture is Rs. 1,800/-. The commission earned by studycafe on that Lecture is 10%.

 

An important thing to note here is that studycafe is just a platform, the billing is done by teacher to student

 

The Tally Entry in books of Studycafe will be as follows:

1.) When Payment is received by Studycafe

 

Bank A/C Dr	11800 Dr.
To Teacher A/C (Liability as Teacher is a creditor)	10600 Cr.
To TCS CGST A/C	100 Cr.
To TCS SGST A/C	100 Cr.
To Commission (Income Exclusive of GST)	847 Cr.
To CGST A/C	76 Cr.
To SGST A/C	76 Cr.

 

2.) While Making Payment to Teacher

 

Teacher A/C Dr	10600 Dr.
To Bank A/C	10600 Cr.

 

3.) While making Payment of TCS on GST

 

TCS CGST A/C Dr.	100 Dr.
TCS SGST A/C Dr.	100 Dr.
To Bank A/C	200 Cr.

 

4.) While making Payment of GST

 

CGST A/C Dr.	76 Dr.
SGST A/C Dr.	76 Dr.
To Bank A/C	153 Cr.

 

The Tally Entry in books of Teacher will be as follows:

1.) When Order is received by the Teacher

 

Studycafe A/C Dr.	10600 Dr.
Commision Expense A/C Dr.	847 Dr.
CGST TCS Recivable A/C Dr.	100 Dr.
SGST TCS Recivable A/C Dr.	100 Dr.
CGST Receivable A/C Dr.	76 Dr.
SGST Receivable A/C Dr.	76 Dr.
To Sale of Lecture	10000 Cr.
To CGST A/C	900 Cr.
To SGST A/C	900 Cr.

 

2.) While Receiving Payment FromStudycafe

 

Bank A/C Dr.	10600 Dr.
To Studycafe A/C	10600 Cr.

 

3.) While making Payment of GST

 

CGST A/C Dr.	900 Dr.
SGST A/C Dr.	900 Dr.
To Bank A/C	1447 Cr.
To CGST Recivable	76 Cr.
To SGST Recivable	76 Cr.
To CGST TCS Recivable A/C	100 Cr.
To SGST TCS Recivable A/C	100 Cr.

 

How to Adjust Sales Return

An e-commerce company is required to collect tax only on the net value of taxable supplies made through it. In other words, value of the supplies which are returned 165 (supply return) may be adjusted from the aggregate value of taxable supplies made by each supplier (i.e. on GSTIN basis).

In other words, if two suppliers A and B are making supplies through an e-commerce operator, the net value of taxable supplies would be calculated separately in respect of A and B.

 

Particulars	A (In INR)	B (In INR)
Total Sales	100	200
Sales Return	-20	-10
Net Value of Supplies on which TCS will be Collected	80	190

 

If the value of returned supplies is more than supplies made on behalf of any of such supplier during any tax period, the same would be ignored in his case.

 

Particulars	A (In INR)	B (In INR)
Total Sales	100	200
Sales Return	-120	-10
Net Value of Supplies on which TCS will be Collected	0	190

 

Return for E-Commerce Operator

Every operator is required to furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount 167 collected by it as TCS during a month within 10 days after the end of such month in FORM GSTR-8. The operator is also required to file an annual statement by 31st day of December following the end of the financial year in which the tax was collected in FORM GSTR-9B.

For FY 17-18 Form GSTR-9B is not applicable as provisions of TCS were made applicable after March 2018.

Due Date of Payment of GST TCS and Rate of Interest in case of Late Payment

The tax collected by E Commerce Operator during a month shall be paid in account of GSTN within 10 days after the end of such month. Interest @ 18% is applicable in case of late payment of TCS.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.In no event shall I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.