GST rollout: Relaxation in TCS provision to boost e-commerce, says Ficci

E-commerce needs to be nurtured with right policy frameworks, Ficci

The Federation of Indian Chambers of Commerce and Industry (Ficci) has welcomed Finance Ministry's decision to delay the enforcement of tax collection and tax deduction at source under the Goods and Services Tax (GST).

It said that the government's decision is a welcome step as enforcing Tax Collection at Source immediately under GST would have slowed down e-commerce, economic growth and job creation.

"E-Commerce is one of the flourishing sectors of the country and has remained as a core part of the Government's Start up India, Make in India, Digital India and Skilled India programmes. The sector is needed to be nurtured with right policy frameworks and guidelines in order to make it more productive. Ficci welcomes the policy announcement of deferment of Tax Collection at Source (TCS) Provision Under GST," said  A Didar Singh, Secretary General, Ficci.

He further added that "TCS would have a direct impact on the sellers of the marketplace, who are generally small in nature with a turnover in the range of Rs. 50 lakh to Rs 10 crore per annum. TCS could have disrupted the cash flow, thereby disrupting the level playing field between online selling and offline selling, and discouraged sellers particularly SMEs from selling online. This carries the risk of slowing down the growth of e-commerce with consequential negative impact on economic growth, job creation, and infrastructure investments and possibly tax collections itself".

The Finance Ministry on Monday announced a delay in implementation of the provisions of Section 51 and 52 under the CGST / SGST Act, 2017, aiming to ensure smooth rollout of the GST.

Owing to feedback received from the trade and industry regarding the aforementioned provisions, the Ministry announced that the provisions of Tax Deduction at Source (Section 51 of the CGST / SGST Act 2017) and Tax Collection at Source (Section 52 of the CGST/SGST Act, 2017) will be brought into force from a date which will be communicated later.

Furthermore, persons liable to deduct or collect tax at source will be required to register, but the liability to deduct or collect tax will arise only from the date on which the respective sections are brought into force.

Also, e-commerce operators, who were liable to be registered under clause (ix) of Section 24 of the CGST / SGST Act, 2017 will not be liable to do so until the provision of ' Tax Collection at Source' is enforced.

In other words, persons supplying goods or services through electronic commerce operators liable to collect tax at source would not be required to obtain registration immediately, unless liable under Section 22 or any other category specified under Section 24 of the CGST / SGST Act, 2017 .

This step was implemented to provide more time for persons liable to deduct tax at source, e-commerce companies and their suppliers to prepare for the rollout of the forthcoming tax regime.