E-commerce players to get TCS liability, state to deduct 1% GST

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All the foreign e-commerce players including Amazon, Apple and Google are liable to pay 1% GST to fall in line rules of tax collected at source (TCS) from October 1. The government has instructed e-commerce companies to subtract 1% TCS prior to paying their suppliers.

This will require a registration for goods and services tax by the companies in all states it is present.

As per a statement by the Internet and Mobile Industry of India (IAMAI), “With the government notifying the provision part of section 52 of the central GST Act … the provision of Tax Collected at Source (TCS) for e-commerce is an unfair liability imposition on the sector…this will create operational challenges.”

The rate of TCS was finalised at 0.50% of the net value of intra-state taxable supplies made by other suppliers through e-commerce portal in the Central Tax, as said in a notification by Finance Ministry released on Monday.

The companies have pleaded the government to ease the registration process by replacing multiple state registration process to a single registration. Currently, the firms are required to register at all the state.

What does the provision states?

1% SGST and 1% CGST will be levied on intrastate supplies of more than ₹2.5 lakh. A TDS of 2% will be charged with GST in case the supplies of ₹2.5 lakh are made within the state.

Reportedly, the action of the government to levy tax is to contain tax evasion.

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