The Central Board of Indirect Taxes and Customs (CBIC) has now clarified that e-commerce companies are not liable to collect taxes on goods supplied by companies with an annual turnover of less than USD 28,419 (INR 20 Lakh) and are not registered under the Goods and Services Tax (GST) regime.
In a clarification to FAQs for Tax Collected at Source (TCS), the tax regulator noted that the GST law provides that a person supplying services through an ecommerce platform is exempted from obtaining compulsory registration, provided his aggregate turnover does not exceed USD 28,419 (INR 20 Lakh) or USD 14,209 (INR 10 Lakh) in case of specified special category states) in a financial year.
“Since such suppliers are not liable for registration, ecommerce operators are not required to collect TCS on the supply of services being made by such suppliers through their portal,” the CBIC said.
According to the anti-tax avoidance measure, ecommerce companies have to deduct tax at the rate of 1 percent (CGST) +1 percent (SGST), before making the payment to the supplier for proceeds of a sale.
The clarification comes as a partial relief to e-commerce companies who were required to deposit taxes collected from their sellers for the month of October by November 10. However, several e-commerce companies had to pay fines after they missed the November 10 deadline to deposit TCS on payments made to their sellers.
The deadline for TCS provisions, introduced as a part of Section 52 of the Central Goods and Services Tax Act, has been deferred many times since July 2017 and was finally set to be implemented from October 1, 2018.
The board further suggested that if ecommerce operators who could not register themselves for GST but have already collected TCS, they can show the amount collected while filing the first return form GSTR-8.— Inc42