The rate of TCS under GST is a crucial concept for businesses dealing with online marketplaces. Tax Collected at Source (TCS) applies when e-commerce operators such as Amazon, Flipkart, or Zomato deduct tax while making payments to suppliers. Knowing the exact rate of TCS under GST is important for both e-commerce operators and sellers because it directly impacts their compliance and cash flow.
Understanding TCS under GST
TCS means that the e-commerce operator collects a percentage of tax from suppliers on the net value of taxable supplies made through their platform. The rate of TCS under GST is fixed under Section 52 of the CGST Act. Unlike TDS, which applies to specified payments, TCS specifically relates to online sales and services facilitated through e-commerce platforms.
What is the Rate of TCS under GST?
The government has prescribed different rates of TCS based on the nature of supply. The following table explains them:
| Type of Supply | Rate of TCS | Applicable Tax |
|---|---|---|
| Intra-state supply of goods through e-commerce | 1% (0.5% CGST + 0.5% SGST) | CGST + SGST |
| Inter-state supply of goods through e-commerce | 1% IGST | IGST |
| Supply of services through e-commerce (covered under TCS provision) | 1% IGST or 0.5% CGST + 0.5% SGST | IGST/CGST/SGST |
Thus, the rate of TCS under GST is generally 1% of the net taxable value.
Compliance for E-Commerce Operators
E-commerce operators must:
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Deduct the rate of TCS under GST while paying suppliers.
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Deposit the collected TCS to the government within 10 days after the end of the month.
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File GSTR-8 return to report the TCS details.
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Issue a TCS certificate to the supplier so they can claim the credit.
By following these rules, operators ensure proper compliance and transparency.
Impact on Sellers
Sellers can claim the TCS deducted as credit in their electronic cash ledger. Although the rate of TCS under GST temporarily reduces their cash flow, it helps them stay compliant and avoid penalties. Moreover, it ensures that their turnover reported in GST returns matches with the e-commerce operator’s records.
Conclusion
The rate of TCS under GST is generally 1% of the taxable value of supplies made through e-commerce platforms. Both operators and sellers must understand these provisions to maintain compliance and avoid penalties. Since the system provides transparency, it benefits the government, sellers, and the overall economy.
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