TCS- FOR E COM OPERATOR IN GST- SEC 52 OF CGST ACT 2017 & NOTIFIED SERVICES 9(5) WHEOPERATOR DISCHARGES THE LIABILITY OF THE SUPPLIER UNDER REVERSE CHARGE MECHANISM.
- Kailash Kumar Manikandan
- Jul 19, 2024
- 6 min read
Updated: Dec 20, 2024
TABLE OF CONTENTS
Who is an Ecom Operator:-
Sec 2 (45) defines Ecommerce Operator which means any person who owns,
operates or manages digital or electronic facility or platform for electronic commerce;
Practically electronic commerce has been bifurcated in to two distinct models, namely
1.Inventory based Model
2.Market Place model
Inventory Based Model:- Goods / services are owned by ecom operator and they sell
it directly to consumers. In this model E com operator is the supplier. He acts as direct
supplier, collects GST and remit to the government directly.
Market Place Model:-
The ECOM operator plays role of an intermediary, bridges the transactional
interactions between buyers and sellers. He collects TCS on taxable supplies made
through their platform, while levying GST on goods/services sold though this platform
is extended directly to retailers/merchants.
Why TCS on E com Operator?
Almost all the products are now available in online through many ecommerce
operators.
The Success of this platforms is by the strong collaboration between ecom operators
i.e online players and retailers/wholesalers. It became difficult to track the supplies
made by these retail/wholesale operators and to confirm whether all the GST collected
are promptly reported and paid. To enhance fair trade practice and to prevent Tax
evasion GST department has brought this TCS provisions for ecom operators.
Ecom operator collects 0.5% of TCS (w.e.f 10.07.2024) from the
supplier(Retailer/Wholesaler) on Sale price as listed and collected by the ecom
operator on behalf of the supplier.
Files Suitable Returns where by the data of such supplier is fully captured i.e value of
supply, GST collected. These Collected data then could be reconciled with the retailer
declaration of sales, by this matching of TCS data with that of sales data any tax
evasion will come to light immediately
Example:-
Mr X (supplier) an individual trading in Computer accessories list his product in
amazon. Mr Y (end customer) purchases a keyboard for Rs 1000/- from Amazon
platform (ecom operator) where by amazon receives Rs 1000 the sale price
consideration from Mr X. Whereas key board is supplied by Mr X to Mr Y. Amazon in
turn will pay back to Mr X after deducting the agreed commission of 10%
Amount Payable by amazon to Mr X
Here The net taxable value of Supply is 1000
TCS is 0.5% Rs 5
Service fee of amazon Rs 100
Net amount payable to Mr X by Amazon is Rs 895
Amazon will remit this TCS of Rs 5 and then the same credited to GST cash/ITC ledger
of supplier (Mr X).Amazon will file GSTR 8 with all details of supplies made by X and
TCS on the same. Thus ecommerce operator collects the sale price consideration from
the buyer and deducts TCS, service fee and remits the balance to the supplier. This
TCS is then passed on to the supplier. Hence it becomes easier for GST department
to match the sales declared by supplier with that of the data provided by ecom operator
where by GST evasion be arrested.
Sec 9 (5) and sec 52 of CGST Act deals with ecommerce operators.
What is sec 9 (5) ?- ECOM OPERATOR DISCHARGES GST LIABILITY OF
SUPPLIER AS IF HE HAS PROVIDED THE SERVICES (FOR NOTIFIED
SERVICES).
Notified category of Services in 9 (5)
1.Service of passenger Transport (motorcycle, motor cab, maxi cab, omni bus)
2.House Keeping Services 3. Accommodation Services 4. Restaurant Services
A. Services are supplied through ecommerce operator
B. The tax on intra-State supplies on the above supply and all the provisions of
this Act shall apply to such electronic commerce operator as if he is the supplier liable
for paying the tax. Thus E commerce operator will discharge the tax liability as if he
has provided the services though services are provided by third party using the
ecommerce platform.
C. Regardless of whether the supplier is registered under GST, the e-commerce
operators will be responsible for paying the tax as though they were the supplier,
according to the reverse charge mechanism.
D. Previously, restaurants and cloud kitchens offering services through e
commerce platforms (like Zomato and Swiggy) were responsible for paying GST on
their services. However, starting January 1st, 2022, the obligation to pay the tax under
the reverse charge mechanism shifted to the e-commerce operators (Zomato and
Swiggy). They must pay the tax through the electronic cash ledger at a rate of 5%,
regardless of whether the restaurant (actual supplier) is registered under GST.
Additionally, no Input Tax Credit can be claimed in this scenario.
E. For any services notified under Section 9 (5), the invoice will be issued (Self-
generated) by the e-commerce operator themselves, effectively creating a self-
generated invoice even though the supplies are made by a third party.
F. If an e-commerce operator provides a combination of services under a single
order that includes notified services [Sec 9 (5)], they must issue a separate self-
generated invoice for the portion of the order that falls under the notified services.
G. If the e-commerce operator does not have a physical presence in the taxable
territory, the tax liability will fall on anyone representing the e-commerce operator for
any purpose in that area.
However, if the e-commerce operator lacks both a physical presence and a
representative in the taxable territory, the operator must appoint someone to be
responsible for paying the tax.
Sec 52 of CGST Act
•Taxable supplies of goods and/or services other than specified services under sec
9 (5) mentioned above, made through an ECO (E commerce Operator).
• consideration is to be collected by an ECO on behalf of the actual supplier
• TCS is to be collected by an ECO on the net value of taxable supplies at 0.5% w.e.f
10.07.2024 i.e 0.25 % CGST and 0.25% SGST (Prior to that it was 1% i.e 0.5%
CGST and 0.5% SGST)
• Net value of taxable supplies=Aggregate value of taxable supplies of goods or
services or both made during the month (other than services notified u/s 9(5) of the
CGST Act) as reduced by aggregate value of taxable supplies returned to the
supplier during the month.
• This TCS collected shall be paid to the government within ten days after the end of
the month by the ecom operator and file form GSTR 8 furnishing details of details
of outward supplies of goods or services or both effected through it, including the
supplies of goods or services or both returned through it, and the amount collected
as TCS.
• ecom operator to file annual statement in form GSTR 9B containing details of
outward supplies made through it and supplies returned through it and the amount
collected as TCS before 31st December following the end of such financial year.
• Any corrections or omissions in details furnished in GSTR 8 shall be allowed up to
30th of November following the end of financial year or actual date of furnishing
annual statement whichever is earlier.
• The TCS collected by the e-commerce operator becomes the input tax credit for
the supplier. When the e-commerce operator files form GSTR 8, the supplier can
claim the credit in their electronic cash ledger for the amount of TCS collected and
remitted by the e-commerce operator.
• Details furnished by ecom operator in GSTR 8 shall be matched with the outward
supplies declared by the supplier in such manner and time as may be furnished.
• where such details furnished by ecom operator and outward supplies of supplier
does not match the discrepancy be communicated to both persons. If this
discrepancy is not rectified either by the supplier or by the ecom operator, then such
discrepancy be added to the output tax liability of the supplier (where ecom operator
reporting > outward supplies as declared by supplier)
• Authority of not less than Deputy commissioner may serve notice requiring operator
to furnish the following details.
1. Supplies of goods or services or both effected through such operator
2. Details of stock held by suppliers in godowns or warehouses managed by
such operators and declared as additional place of business by such supplier.
• Within 15 days on receipt of such notice such operator shall furnish the requested
information. Any operator who fails to furnish such information shall in addition to
any actions that may be taken u/s 122 be liable for a penalty that may extend up
to Rs 25,000/-
• The operator shall not be allowed to furnish a statement under 52 (4) i.e file GSTR
8 after the expiry of a period of three years from the due date of furnishing the said
statement
GSTR Return Filing Details:
Sec 9 (5) in GSTR 3B | Sec 52 in GSTR 8 |
To be filled in GSTR 3B 3.1.1 table Table 3.1.1 (i) – Taxable supplies on which electronic commerce operator pays tax u/s 9(5) to be filled by e com operator – Table 3.1.1(ii)- Taxable supplies made by registered person through electronic commerce operator, on which electronic commerce operator is required to pay tax u/s 9(5)- to be filled by registered person making supplies through ecom operator. | Form GSTR 8 to be filed monthly and Annual return of GSTR 9B to be filed. |
It is pertinent to note that the payment of tax made by ecom operator u/s 9 (5) are to
be made in cash and payment via ITC is not permitted.
Author:
 | Name: CA Rajaprabhu Email ID: info@pnpcglobal.com Mobile No: 9884082100 Website: www.pnpcglobal.com/india |
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