The GST Council, in an FAQ issued on Monday, has clarified that e-commerce companies need not collect tax at source (TCS) from suppliers not registered on the GST portal.
E-commerce companies have been protesting against the TCS provision saying that this increased their compliance burden and also led to a large part of suppliers’ working capital being locked away.
Earlier mandate
The CGST Act 2017 said that every person supplying goods or services through an e-commerce operator had to mandatorily register on the GST portal. However, this was modified in November 2017 to say that suppliers with an aggregate annual turnover of ₹20 lakh or less (₹10 lakh or less for some special category States) were not required to mandatorily register themselves.
“Since such suppliers are not liable for registration, e-commerce operators are not required to collect TCS on supply of services being made by such suppliers through their portal,” the FAQ issued by the Law Committee of the GST Council said. “Some of these clarifications like no deduction of TCS on supplies by unregistered persons, assigning of an administrative jurisdiction in States where e-commerce players do not have a place of business, were quite sought for by the e-commerce players and should aid easier implementation of this compliance by them,” Abhishek Jain, tax partner at EY, said in a note.
The FAQ added that each State/UT has marked out one administrative jurisdiction where all e-commerce operators having business (but not a physical presence) must register.
“E-commerce operators, who have been unable to obtain registration in the month of October 2018, but have already collected TCS for the said month, may furnish the details of TCS collected in the month of October 2018 in the first return in Form GTSR-8 to be filed after obtaining registration,” the FAQ said.
