E-commerce firms like Snapdeal and Amazon will have to mandatorily deduct up to 1 per cent TCS (Tax Collected at Source) while making payments to their suppliers under the GST regime which is expected to kick in from July 1.
The model law provides that every electronic commerce operator, not being an agent, shall collect up to one per cent TCS, as may be notified on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.
Experts had raised concerns saying this would mean that a similar amount will have to be levied on inter-state movement of goods, taking the total TCS deduction to 2 per cent.
The model law had defined 'electronic commerce' as supply of goods or services, including digital products, over electronic network.
'Electronic commerce operator' would mean those persons who own, operate or manage digital or electronic facility or platform for electronic commerce.