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.