E-commerce operators will have to register themselves in every state where their suppliers are located for collection of TCS and foreign companies can appoint an ‘agent’ on their behalf for securing such registration, the CBIC has said.
E-commerce companies will from October 1 have to deduct 1 per cent tax collected at source (TCS) before making payments to their suppliers. The Central Board of Indirect Taxes and Customs (CBIC) has come out with a list of 29 FAQs answering industry queries on the modalities to be followed by the e-commerce operators for deducting TCS. It said that e-commerce operators have to obtain separate registration for TCS irrespective of whether they are already registered under GST as a supplier or otherwise and have GSTIN.
The amount collected by the operator is to be paid to the government within 10 days after the end of the month in which the said amount was collected. The CBIC said e-commerce companies, whether domestic or foreign, would have to register themselves 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 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,” the CBIC said.
In case of foreign e-commerce operators which do not have a place of business in India since they operate from outside but have suppliers and customers in the country, the CBIC said they would be liable to collect TCS on such supply and would be required to obtain registration in each state/union territory (UT).
“If the foreign e-commerce operator does not have physical presence in a particular State / UT, he may appoint an agent on his behalf,” it added. Clarifying on when e-commerce operators will have to collect the tax at source, CBIC said TCS is to be collected once supply has been made through the operator and where the business model is that the consideration is to be collected by the operator irrespective of the actual collection of the consideration.
Giving an example, the CBIC said if the supply has taken place through the e-commerce operator on October 30, 2018 but the consideration for the same has been collected in the month of November, then TCS for such supply has to be collected and reported in the statement for the month of October 2018.
The CBIC said every operator will be 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 collected by it as TCS during a month within 10 days after the end of the month in Form GSTR-8.
“The operator is also required to file an annual statement by December 31, following the end of the financial year in which the tax was collected in Form GSTR-9B,” it added. The FAQ also defined e-commerce operator as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
E-commerce means the supply of goods or services or both, including digital products over digital or electronic network. On whether a supplier of goods on e-commerce platform would be entitled to threshold exemption, the CBIC said every person supplying goods through an e-commerce operator shall be mandatorily required to register irrespective of the value of supply made by him.
“However, a person supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an e-commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover does not exceed Rs 20 lakhs (or Rs 10 lakhs in case of specified special category States) in a financial year,” it added.
The CBIC also said that any authority not below the rank of Deputy Commissioner may serve a notice requiring the operator to furnish the details of their supplies of goods or services or both as well as stock of goods held by the suppliers within 15 working days of the date of service of such notice.
AMRG & Associates Partner Rajat Mohan said, “Government has come up with certain clarifications meagerly two days before implementation of nation-wide TCS- GST scheme which would have grave consequences on all e-commerce operators and suppliers registered on such platforms. “Besides this government has chosen to troubleshoot the concerns with the help of FAQs which have only educational value rather than any legal sanctity, this may lead to litigation in future.”
EY Tax Partner Abhishek Jain said, “The clarification on choosing the head office as the place of business in the state where the e-commerce operator does not have a presence brings clarity on the registration aspect.”