Suppliers not liable to pay TCS with less than Rs 2-million turnover: CBIC

E-commerce companies are not liable to collect TCS on supplies made by entities with turnover not exceeding Rs 2 million and are not registered under GST, the CBIC has said.

According to Goods and Services Tax (GST) provisions, beginning October 1, 2018, e-commerce companies deduct 1 per cent tax collected at source (TCS) before making payments to their suppliers.

The Central Board of Indirect Taxes and Customs (CBIC), in a clarification to the FAQ for TCS, said GST law provides that a person supplying services through an e-commerce platform is exempted from obtaining compulsory registration provided his aggregate turnover does not exceed Rs 2 million (or Rs 1 million in case of specified special category states) in a financial year.

"Since such suppliers are not liable for registration, e-commerce operators are not required to collect TCS on supply of services being made by such suppliers through their portal," the CBIC said.

In a separate FAQ, the CBIC said e-commerce operators who could not register themselves for GST but have already collected TCS, can show the amount collected while filing the first return form GSTR-8.

"E-commerce operators, who have been unable to obtain registration in the month of October, 2018 but have already collected TCS for the said month, may furnish the details of TCS collected in the month of October, 2018 in the first return in Form GTSR-8 to be filed after obtaining registration," the CBIC said.

The clarifications come after the e-commerce companies faced troubles in deducting TCS and depositing the same to the government.

The CBIC had earlier said that e-commerce companies, whether domestic or foreign, would have to register themselves in each state / UT as the obligation for collecting TCS will be there for every intra-state or inter-state supply.

Foreign e-commerce operator, which does not have a physical presence in a particular state / UT, was asked to appoint an agent on his behalf for the purpose of TCS registration.

"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 had said.

In a clarification, the CBIC Monday said each State/UT has indicated one administrative jurisdiction where all e-commerce operators having business (but not having physical presence) in that State/UT will register.

"The proper officer for the purpose of registration of ECOs (ecommerce companies) has also been notified by each State/UT," it said.

EY Tax Partner Abhishek Jain said: "Some of these clarifications like no deduction of TCS on supplies by unregistered persons, assigning of an administrative jurisdiction in states where e-commerce players do not have a place of business, were quite sought for by the e-commerce players and should aid easier implementation of this compliance by them".