In recent years, e-commerce platforms have boomed excessively, and so did the various technicalities for the e-commerce operators. As a result, they must follow different TDS and TCS policies to save themselves from paying unnecessary expenses. This article will cover various TDS and TCS compliances for e-commerce operators under the Income Tax Act 1961 and the Goods and Services Act, 2017. Listed below are some similar TDS (source deductible) provisions under Income Tax and TCS (source tax) under GST:
TDS under section 194-O of the Income Tax Act:
In accordance with this section, when an e-commerce business sells goods or provides e-commerce services via an electronic or digital site or platform, the e-commerce operator must, when crediting a sale or service amount or both to an e-commerce participant* (or paying the amount to the participant, whichever is earlier), deduct Income Tax at the rate of 1% on the gross amount of the sale or service. Exemptions: The e-commerce operator is not required to deduct TDS if the amount paid or credited to an individual/ HUF during the financial year does not exceed INR 5 lakh if he/she has provided his or her PAN or Aadhaar. If the e-Commerce participant does not provide his or her PAN or Aadhaar, TDS must be deducted at a rate of 5%, in accordance with the provisions of Section 206AA. TDS deducted by e-commerce operators need to be submitted to the government on the 7th (April 30 in the case of March) of the following month, where the same needs to be deducted. The quarterly TDS returns are also required to be submitted by the e-commerce operator.
TCS under section 52 of the Goods and Services Tax (GST) Act:
According to this section, the e-commerce operator is required to collect a value of one percent (0.5% CGST + 0.5% SGST or 1% IGST) of the total value of the taxable goods being made, where the operator must collect consideration for these assets. A separate registration is required to obtain for collecting TCS under Section 24 (vi) of the CGST Act, 2017. The “net value of taxable supplies” refers to the aggregate sales of goods, services, or both made by all the registered persons through the e-commerce portal reduced by the aggregate amount of taxable goods, services, or both returned to suppliers within the specified month. It also does not include the value of taxable supplies on which the total tax is payable by the e-commerce operators themselves. Under GST, there is no specific exemption, but TCS should be collected on the net value of taxable supplies. Therefore, will be no TCS if the goods or services are exempted. The tax amount collected by the operator must be paid to the government within ten days of the following month in which the tax was collected.
The e-commerce operator is required to submit an electronic statement called GSTR-8 for the purpose of reporting the tax collected and supplies made through an e-commerce platform. GSTR 8 contains details of all the outward supplies of goods and/or services delivered by suppliers through its marketplace net of return and collected during the calendar month. GSTR-8 must be submitted within ten days from the end of the relevant calendar month. In addition, an annual return/ statement called GTSR-9B is also required to be filed by the e-commerce operator by December 31 after the end of the financial year in which the work is performed, and the tax is collected from the source.
E-commerce operators must integrate the TDS provision under the Income Tax Act 1961 and the TCS under the Central Goods and Service Tax Act, 2017 in the same function. E-Commerce Participant – Any person resident in India who provides goods, services, or both, which may include digital products as well, through an electronic facility, on a digital platform, or on an electronic trading platform. We hope that the article simplified the TDS & TCS provisions on e-commerce operators for you to understand and grasp. However, if there is still any lingering doubt or query, let our experts help you out.
Written by – Anjali Sharma
At MAS, we assist our clients with various income tax compliances, including income tax assessments, ITR filings, tax advisory, TDS matters other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about Compliance with TDS and TCS for E-commerce Operators , kindly contact us.