Power to collect Tax

Section 52 provides provision for Collection of tax at source (TCS), by e-Commerce operator [ECO] on taxable supplies made through it by other suppliers.

TCS refers to the tax collected at source.

Abbreviation

Supplies = Supply of goods or services or both

ECO = E-commerce operator

TCS = Tax collected at source

Refer Section 2(45) for meaning of “e-commerce operator”

Section 52(1)

Notwithstanding anything to the contrary contained in this Act,

every ECO, not being an agent,

shall collect an amount not exceeding 1%., as notified by the Gov [i.e 0.25% CGST],

of the net value of taxable supplies made through it by other suppliers

where the consideration on such supplies is to be collected by the ECO.

Summary of notifications issued u/s 52(1)

Conditions for application of section 52(1)

(i) ECO, not being an agent,

(ii) There should be taxable supplies

(iii) Supplies should be made by other suppliers through ECOs

(iv) Consideration of such supplies should be received by ECOs

Section 20 of IGST Act read with section 52

In case of TCS, the operator shall collect tax @0.5% of the net value of taxable supplies

TCS Rate

0.5% IGST or 0.25% CGST + 0.25% SGST

Ex

Suppose a certain product is sold at Rs.1,000/- through an ECO by a seller. The ECO would collect tax @ 0.5% of the net value of Rs.10,000/- i.e. Rs.50/-

Question & Answer

Explanation to Section 52(1)

For this sub-section, “net value of taxable supplies” shall mean

aggregate value of taxable supplies other than services notified u/s 9(5) made during any month by all RPs through the operator

(-) aggregate value of taxable supplies returned to the suppliers during the said month.

TCS must be collected on aggregate value of

(+) taxable supplies made through it (-) supplies returned

TCS are not required on services notified u/s 9(5)

Question & Answer

FAQ-11

Whether value of net taxable supplies to be calculated at gross level or at GSTIN level?

The value of net taxable supplies is calculated at GSTIN level.

Ex

If two suppliers “A” and “B” are making supplies through an ECO

the “net value of taxable supplies” would be calculated separately in respect of “A” and “B”.

FAQ-20

It is very common that customers of ECO return goods. How these sales returns are going to be adjusted?

An ECO is required to collect tax only on the net value of taxable supplies made through it.

If the value of returned supplies is more than supplies made on behalf of any of such supplier during any tax period, the same would be ignored in his case.

FAQ-21

ECO collects TCS at the net of returns. Sometimes sales return is more than sales and hence can negative amount be reported?

Negative amount cannot be declared. There will be no impact in next tax period also.

In other words, if returns are more than the supplies made during any tax period, the same would be ignored in current as well as future tax period(s).

(i) On supply of services notified u/s 9(5) of the CGST Act.

(ii) On exempt supplies

(iii) If ECO supplies goods/ services as an agent

(iv) Consideration is not directly received by ECO.

(v) Where a supplier makes supplies on his own account through a web site hosted by him, there is no requirement to collect TCS.

(vi) On supplies on which the recipient is required to pay tax on reverse charge basis.

(vii) TCS is not liable to be collected on import of goods. Since import of goods would fall within the domain of the Customs Act, 1962, it is outside the purview of TCS.

FAQ-15

Whether TCS to be collected on supplies on which the recipient is required to pay tax on reverse charge basis?

No, TCS is not required to be collected on supplies on which the recipient is required to pay tax on reverse charge basis.

FAQ-17

Whether TCS is to be collected on import of goods or services or both?

TCS is not liable to be collected on any supplies on which the recipient is required to pay tax on reverse charge basis. As far as import of goods is concerned since same would fall within the domain of Customs Act, 1962, it would be outside the purview of TCS. Thus, TCS is not liable to be collected on import of goods or services.

Question & Answer

In the direct sales model, businesses sell their products or services directly to consumers through their own online stores or websites.

Ex

Mr. X is a supplier selling his own products through a web site hosted by him. Whether he is required to collect TCS on such supplies?

As per section 2(45), Mr. X will come under the definition of an “ECO”.

However, according to Section 52, TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the ECO.

In cases where someone is selling their own products through a website, there is no requirement to collect tax at source as per the provisions of this Section.

Ex

If ECOs purchase goods from different vendors and are selling them on their website under thier billing. Is TCS required to be collected on such supplies?

No. According to Section 52, TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the ECO.

In the online marketplace model, an online centralised platform is provided connecting manufacturers/ retailers with potential customers.

The platform itself does not own or stock the products or has the expertise to provide services being sought by the customers; instead it merely facilitates the transactions and may offer additional services such as payment processing, customer support and logistics.

The actual supply of goods is done by the respective suppliers. The platform generates revenue by charging from the supplier the fees or commissions for using the marketplace and accessing its customer base. The commission is typically a percentage of each supply made by the supplier.

This case is covered u/s 52

Question & Answer

Circular No. 74/48/2018-GST dated 05-11-2018

P-5

It is hereby clarified, that TCS at the notified rate, u/s 52, shall be collected by Tea Board respectively from the –

(i) sellers (i.e. tea producers) on the net value of supply of goods i.e. tea; and

(ii) auctioneers on the net value of supply of services (i.e. brokerage).

Refer above circular for complete clarifications

Section 52(2)

The power to collect the amount specified in sub-section (1) shall be without prejudice to any other mode of recovery from the operator.

The powers of ECO is restricted only to the extent of TCS under circumstances specified therein and nothing more.

Section 52(3)

TCS collected by ECOs shall be paid to the Government

within 10 days after the end of the month in which such collection is made,

in such manner as may be prescribed.

TCS must be deposited by the 10th of the following month, during which such collection is made.

Ex

If the TCS has been collected in the month of July, the amount has to be remitted into the Government Treasury on or before 10th August

Question & Answer

FAQ-19

Whether payment of TCS through Input Tax Credit of operator for depositing TCS as per Section 52 (3) of the CGST Act, 2017 is allowed?

No, payment of TCS is not allowed through ITC of e-Commerce operator.

FAQ-13

TCS is to be collected once supply has been made through the ECO and where the business model is that the consideration is to be collected by the ECO of the actual collection of the consideration.

For example, if the supply has taken place through the ecommerce operator on 30th October, 2018 but the consideration for the same has been collected in the month of November, 2018, then TCS for such supply has to be collected and reported in the statement for the month of October, 2018.

Section 50(1)

Every person who is liable to pay tax but fails to pay tax or any part thereof to the Government within the period prescribed,

shall pay on his own, interest @ 18%

for the period for which the tax or any part thereof remains unpaid.

For complete guide refer guide on section 50

Section 52(4) read with Rule 67(1)

Every operator who collects TCS

shall furnish a statement in GSTR-8, electronically, containing the details of

outward supplies made through it,

supplies returned through it, and

the amount of TCS collected u/ss (1)

during a month,

within 10 days after the end of such month.

ECO is required to furnish a monthly statement in GSTR-8 by the 10th of the following month.

[1][Explanation to Section 52(4)

Due date for furnishing the GSTR-8 for the months of Oct, Nov and Dec, 2018 shall be the [2][07th February, 2019]]

[3][Proviso to Section 52(4)

Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing the statement for such class of RPs as may be specified therein:

Provided further that any extension of time limit notified by the Commissioner of State/UT tax shall be deemed to be notified by the Commissioner.]

Refer above notification for extended due date of GSTR-8

Issue-10 of Circular No. 136/06/2020-GST dated 03-04-2020

What are the measures that have been specifically taken for taxpayers who are required to collect tax at source u/s 52?

Under the provisions of section 168A of the CGST Act, in terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the said class of taxpayers have been allowed to furnish the statement specified in section 52, for the months of March, 2020 to May, 2020 on or before the 30th day of June, 2020.

[4][Section 52(15)

The operator shall not be allowed to furnish a statement u/ss (4) after the expiry of a period of three years from the due date of furnishing the said statement:

[5][Proviso to Section 52(15)

Government may, by notification, subject to such conditions and restrictions as may be specified therein,

allow an operator or a class of operators to furnish a statement u/ss (4),

even after the expiry of the said period of three years from the due date of furnishing the said statement.]

Section 52(6)

After furnishing of GSTR-8 u/ss (4)

If ECO discovers any omission or incorrect particulars therein,

other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities,

he shall rectify such omission or incorrect particulars

in the statement to be furnished for the month during which such omission or incorrect particulars are noticed,

subject to payment of interest u/ss 50(1)

ECO can rectify any omissions or incorrect particulars in succeeding GSTR-8

Error or omission intimated than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities cannot be rectified.

Proviso to Section 52(6)

no such rectification of any omission or incorrect particulars shall be allowed

after the [6][30^th day of Nov] following the end of FY or

the actual date of furnishing of the relevant annual statement,

whichever is earlier.

ECO can rectify errors in statements filed, if any, latest by the return to be filed for the month of Oct, following the end of every financial year.

Section 47(1) [Refer guide on Section 47]

Section 47 provides for late fees for not furnishing various return by due date.

Late fees for GSTR-8 shall be lower of

Rs.200 [Rs.100 for each CGST and SGST] for every day during which such failure continues

Rs.10,000.  [Rs.5,000 for each CGST and SGST]

Filing of GSTR-8 for every tax period is not mandatory. ECO is required to file Form GSTR-8 for a particular tax period, only when goods are supplied through such ECO and they have collected any TCS during the said tax period or they have to amend any details declared in earlier return on their own or on account of any details rejected by supplier.

Annual return in GSTR-9B by ECO by 31^st Dec after the end of relevant FY

Section 52(5) read with rule 80(2)

ECO who collects TCS u/s 52(1)

shall furnish an annual statement in GSTR-9B

before 31^st of Dec following the end of such FY.

GSTR-9B shall contain details of

a) outward supplies effected through it, including supplies returned through it, and

b) TCS collected u/s 52(1) during the FY,

[7][Proviso to Section 52(5)

Commissioner may for reasons to be recorded in writing, by notification, extend the time limit for furnishing the annual statement for such class of registered persons as may be specified therein:

Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner]

Section 52(7) read with Rule 67(2)

[8][The details of TCS furnished by the operator in GSTR-8

shall be made available electronically to each of the registered suppliers] after filing of GSTR-8

[9][for claiming the amount of TCS in his electronic cash ledger after validation

The tax collected by the operator shall be credited to the cash ledger of the supplier who has supplied the goods/services through the Operator.

The supplier can claim credit of tax collected and reflected in the return by the Operator in supplier’s electronic cash ledger.

Section 52(8) read with Rule 78

The following details of supplies made through an ECO, as declared in GSTR-8,

shall be matched with the corresponding details declared by the supplier in GSTR-1/1A

(a) State of place of supply; and

(b) net taxable value:

Provided that where the time limit for furnishing GSTR-1 has been extended, the date of matching of the above mentioned details shall be extended accordingly.

Provided further that the Commissioner may, on the recommendations of the Council, by order, extend the date of matching to such date as may be specified therein.

Section 52(9)

Where the details supplies furnished in GSTR-8 do not match with the corresponding details furnished in GSTR-1,

the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed in Rule 79.

If there is any discrepancy in the value of supplies, the same would be communicated to both of them.

Section 52(10)

Discrepancy communicated u/ss (9) and which is not rectified by

the supplier in his valid return or

the operator in his statement

for the month in which discrepancy is communicated,

shall be added to the output tax liability of the said supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the discrepancy is communicated in such manner as may be prescribed in Rule 79(4).

If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such suppler.

Section 52(11)

The concerned supplier, in whose output tax liability any amount has been added u/ss (10),

shall pay the tax payable in respect of such supply along with interest u/ss 50(1) on the amount so added from the date such tax was due till the date of its payment.

Explanation.—For this section, “concerned supplier” shall mean the supplier of goods or services or both making supplies through the operator.

The supplier will have to pay the differential amount of output tax along with interest.

Section 52(12)

Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the course of any proceedings under this Act, requiring the operator to furnish such details relating to—

(a) supplies of goods or/and services effected through such operator during any period; or

(b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses managed by such operator

as may be specified in the notice.

Godown of ECO may be shown as additional Place of business of supplier

Supplier may hold stock in godowns or warehouses managed by ECO for those supplies which is to be made through such ECO.

 Supplier shall declare such places as additional places of business of suppliers.

An officer not below the rank of Deputy Commissioner can issue notice to an Operator asking him to furnish details relating to volume of goods/ services supplied, stock of goods lying in warehouses/ godowns, etc.

Rule 142(1)(a)

PO shall serve, along with the notice issued u/s 52, a summary thereof electronically in FORM GST DRC-01

Section 52(13)

Every operator on whom a notice has been served u/ss (12)

shall furnish the required information within 15 working days of the date of service of such notice.

Section 52(14)

Any person who fails to furnish the information required by the notice served u/ss (12)

shall, without prejudice to any action that may be taken u/s 122,

be liable to a penalty which may extend to Rs.25,000.

Section 24(ix)

Without applying threshold limit, there is compulsory requirement of registration of persons

who supply goods or services or both, other than supplies specified u/s 9(5)

through such ECO who is required to collect TCS u/s 52.

However, some exemptions have been provided u/s 23(2) from compulsory registration

For complete provision, please refer Para 24.10 of guide on section 24.

Section 24(x)

Every ECOs who is to collect TCS u/s 52 is compulsorily required to be registered without applying threshold limit.

For complete provision, please refer Para 24.11 of guide on section 24.

FAQ-9

Rule of 12 of CGST Rules provided for procedure for registration of ECO required to deduct/ collect TDS/TCS u/s 51 or 52.

Refer complete guide on Rule 12

FAQ-10

Is it necessary for ECO are already registered under GST and have GSTIN, to have separate registration for TCS as well?

ECO has to obtain separate registration for TCS irrespective of the fact whether ECO is already registered under GST as a supplier or otherwise and has GSTIN.

FAQ-8

Whether ECO is required to obtain registration in every State/UT in which suppliers listed on their ECO platform are located to undertake the necessary compliance as mandated under the law?

As per the extant law, registration for TCS would be required in each State /UT as the obligation for collecting TCS would be there for every intra-State or inter-State supply. In order to facilitate the obtaining of registration in each State / UT, the ECO may declare the Head Office as its place of business for obtaining registration in that State / UT where it does not have physical presence.

It may be noted that each State/UT has indicated one administrative jurisdiction where all ECO having business (but not having physical presence) in that State/UT shall register. The proper officer for the purpose of registration of ECOs has also been notified by each State/UT.

FAQ-9

Foreign e-commerce operator do not have place of business in India since they operate from outside. But their supplier and customers are located in India. So, in this scenario will the TCS provision be applicable to such ecommerce operator and if yes, how will foreign e-commerce operator obtain registration?

Where registered supplier is supplying goods or services through a foreign e-commerce operator to a customer in India, such foreign ecommerce operator would be liable to collect TCS on such supply and would be required to obtain registration in each State / UT. It may be noted that each State/UT has indicated one administrative jurisdiction where all ecommerce operators having business (but not having physical presence) in that State/UT shall register. The proper officer for the purpose of registration of ECOs has also been notified by each State/UT. If the foreign e-commerce operator does not have physical presence in a particular State / UT, he may appoint an agent on his behalf.

A composition taxpayer cannot make supplies of services through an ECO [Section 10(2)(d)]. However, a composition taxpayer can make supplies of goods through an ECO.

special procedure is required to be followed by ECOs in respect of supplies of goods through them by composition taxpayers. This is outlined below.

Notification No. 36/2023 - Central Tax dated 04/08/2023

ECO who is required to collect TCS u/s 52 shall follow the following special procedure in respect of supply of goods made through it by composition dealer, namely: —

(i) ECO shall not allow any inter-State supply of goods through it by the said person;

(ii) ECO shall collect TCS in respect of supply of goods made through it by the said person and pay to the Government as per section 52(3); and

(iii) ECO shall furnish the details of supplies of goods made through it by the said person in GSTR-8.

Notification No. 37/2023 - Central Tax dated 04/08/2023

ECO required to collect TCS u/s 52 shall follow the following special procedure in respect of supply of goods made through it by the persons exempted from obtaining registration in vide notification 34/2023 - Central Tax, dated the 31st July, 2023 issued u/s 23(2) namely: —

(i) ECO shall allow the supply of goods through it by the said person only if enrolment number has been allotted on the common portal to the said person;

(ii) ECO shall not allow any inter-State supply of goods through it by the said person;

(iii) ECO shall not collect TCS u/s 52(1) in respect of supply of goods made through it by the said person; and

(iv) ECO shall furnish the details of supplies of goods made through it by the said person in GSTR-8.

7

Whether TCS is required to be collected by ECO on supply of services by unregistered suppliers through their portal?

As per Section 24(ix) of the CGST Act, 2017, every person supplying goods or services through an ecommerce operator is mandatorily required to register. However, vide Notification 65/2017-Central Tax dated 15th November, 2017 a person supplying services, other than supplier of services u/s 9(5) of the CGST Act, 2017, through an ECO were exempted from obtaining compulsory registration provided their aggregate turnover does not exceed threshold limit.

Since such suppliers are not liable for registration, ECO are not required to collect TCS on supply of services being made by such suppliers through their portal.

18

Is there any exemption on Gold, owing to the fact that rate of GST is only 3% and TCS on it would erode the margin for the seller?

No such exemption from TCS has been granted.

27

What will be the place of supply for ecommerce operator for recharge of talk time of the Telecom Operator / recharge of DTH / in relation to convenience fee charged from the customers on booking of air tickets, rail supplied through its online platform?

As per section 12(11) of the IGST Act, 2017, the address on record of the customer with the supplier of services is the place of supply.

28

Under multiple ecommerce model, Customer books a Hotel via ECO-1 who in turn is integrated with ECO-2 who has agreement with the hotelier. In this case, ECO-1 will not have any GST information of the hotelier. Under such circumstances, which e-commerce operator should be liable to collect TCS?

TCS is to be collected by that e-Commerce operator who is making payment to the supplier for the particular supply happening through it, which is in this case will be ECO-2.

Refer Circular No. 194/06/2023-GST dated 17-07-2023

Where multiple ECOs are involved in a single supply of goods through ECO platform, “the ECO” shall mean the ECO who finally releases the payment to the said person for the said supply made by the said person through him.

Question & Answer