As per the provisions of the GST law, an e-commerce operator is required to collect Tax Collected at Source (TCS) from the consideration payable to the supplier who makes supplies through the operator’s platform.
Let’s understand this with the help of examples:
Example 1: Suppose Mr. A is an e-commerce operator who runs an online marketplace for the sale of various products. Seller X lists his product on Mr. A’s platform for sale. The price of the product is Rs. 1,000, and the GST applicable on it is 18%. The buyer purchases the product from Seller X through Mr. A’s platform. In this case, Mr. A is required to collect TCS at the rate of 1% (as per the applicable rate) on the consideration payable to Seller X, which is Rs. 1,000. Thus, TCS collected by Mr. A will be Rs. 10 (1% of Rs. 1,000).
Example 2: Suppose Mr. B is an e-commerce operator who runs an online platform for providing taxi services. Driver Y is registered on Mr. B’s platform to offer his taxi services. The fare charged by Driver Y for a particular ride is Rs. 500, and the GST applicable on it is 5%. The passenger books the ride through Mr. B’s platform. In this case, Mr. B is required to collect TCS at the rate of 1% (as per the applicable rate) on the consideration payable to Driver Y, which is Rs. 500. Thus, TCS collected by Mr. B will be Rs. 5 (1% of Rs. 500).
It is important to note that TCS collected by the e-commerce operator is required to be deposited to the government within 10 days after the end of the month in which it was collected. The supplier on whose behalf TCS is collected can claim credit for the TCS amount while filing his/her GST returns.
In case of non-compliance with TCS provisions, penalties may be levied under the GST law. The penalty can be up to Rs. 10,000 or the amount of TCS evaded, whichever is higher. Therefore, it is essential for e-commerce operators to comply with the TCS provisions of the GST law to avoid any legal action or penalties.
