GST Registration for E-commerce Collecting TCS under GST
E-commerce businesses collecting TCS under GST must register for GST, with no exemption based on turnover. This ensures compliance with tax regulations. For detailed information on GST registration, check the following article!
Jatin Sharma6 Jan, 2024
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GST Registration: Navigating through the complex world of Goods and Services Tax (GST) registration can be challenging, especially for e-commerce operators, online sellers, and dealers. The registration process for them differs from the regular registration process, mainly due to the introduction of Tax Collection at Source (TCS) provisions.
In this article, we'll unravel the finer details of GST registration for e-commerce, breaking down the complexities into easy-understanding terms. Let's dive into this article to demystify the nuances of GST registration for those venturing into the digital marketplace.New Updates on GST Registration
As of February 1, 2023, some noteworthy updates in GST registration have come to light, particularly in the Budget 2023. Here are the Latest updates on GST Registration:- Composition Scheme Flexibility: Now, taxpayers can opt for the composition scheme even if they're selling goods through e-commerce operators that collect Tax Collection at Source (TCS) under Section 52.
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Penalties for E-commerce Operators:
E-commerce operators need to be vigilant. Penalties, either Rs. 10,000 or the tax amount (whichever is higher), will be imposed if they:
- Allow unregistered individuals to sell goods or services unless they are exempt.
- Permit GST-registered sellers to supply goods or services outside their registered state, which they aren't eligible to do.
- Fail to file accurate GSTR-8, providing information on online sales, except for those exempted from GST registration.
Who will Collect TCS Under GST?
In the world of online selling, E-commerce aggregators play a key role in the GST framework. They are tasked with collecting and depositing a 1% tax on each transaction as per Section 52 of the CGST Act. Check the below points for easy understanding:- Transaction Tax: When dealers or traders sell goods/services online, they receive payment after a 1% tax deduction by e-commerce aggregators. This tax is a part of the GST law.
- GST Registration: All those selling online, regardless of their turnover being below the set limit, must register under GST to claim the tax collected by aggregators. However, service providers with a turnover of less than Rs.20 lakh and not using e-commerce operators for tax collection are exempt from this registration.
- Composition Scheme Limitation: E-commerce operators under Section 52 of the CGST Act are not allowed to opt for the composition scheme.
GST Registration Rules for Those Liable to TCS
If you're involved in online commerce and need to collect Tax Collection at Source (TCS), here are complete details of GST registration rules:- Mandatory Registration: According to Section 24 of the CGST Act, all e-commerce companies must get GST registration.
- Application Process: If you're tasked with collecting TCS, submit an application using the form GST REG-07. You can do this directly on the GST portal or at a facilitation centre specified by the Commissioner. Ensure the application is signed or verified through the Electronic Verification Code (EVC).
- Details for E-commerce Operators: If the e-commerce operator doesn't have a physical presence in the State or Union Territory where operations occur, that state's name should be in part A of the REG-07 form. The state where the principal place of business is located, if different, should be mentioned in part B.
- Registration Approval: After verification, the proper officer will grant registration and issue a certificate in form GST REG-06 within 3 working days from the date of application submission.
What is the Cancellation of GST Registration for E-commerce Operators?
If, through an inquiry or proceeding, the officer finds that a person is no longer required to collect Tax Collection at Source (TCS), the officer will cancel their GST registration. The cancellation will be conveyed electronically using form GST REG-08. The process for cancellation follows the guidelines outlined in CGST Rule 22, and the officer will adhere to the same procedure as for regular taxpayers. This ensures a fair and consistent approach when cancelling registrations, making the process straightforward for those involved.GST Registration Process for OIDAR Service Providers
Online Information and Database Access or Retrieval Services (OIDAR) refer to services delivered through the Internet. These services are highly automated, rely on information technology and involve minimal human intervention. The definition of OIDAR has been updated, removing the specific mention of automation. Therefore, OIDAR includes services provided over the Internet or electronic networks. Examples of such services are:- Advertising on the Internet
- Cloud services (like Google Drive)
- Offering e-books, movies, music, and software (e.g., Hotstar, Amazon Prime Video)
- Supplying data or information electronically through a computer network
- Online gaming (e.g., Steam)
- Web-based services for trade statistics, legal and financial data, matrimonial services, social networking, etc.
- Goods supplied with electronic order and processing
- Physical items like books, newspapers, etc.
- Services of lawyers and financial consultants through email
- Booking services for events, hotels, car hire
- Educational or professional courses with a teacher delivering content online
- Offline physical repair services for computer equipment
- Repair of software or hardware remotely through the internet
- Advertising in newspapers, on posters, and on television
- Internet backbone services and internet access services (e.g., BSNL broadband)
GST Registration FAQs
What is TCS under GST for e-commerce?
TCS, or Tax Collected at Source, is a requirement in the GST system for e-commerce operators. They need to collect 0.5% under the CGST Act and 0.5% under the SGST Act. For transactions between states, it becomes 1% (under the IGST Act) of the net values of taxable supplies facilitated through the e-commerce platform. Also, for more detailed information on the GST Registration for e-commerce collecting TCS under GST, check the above article.
Can TCS be collected on the GST amount?
Yes, the amount debited to the buyer's account or received by the seller should include VAT, excise, or GST. Therefore, TCS should be collected inclusive of the GST amount. Also, for more detailed information on the GST Registration for e-commerce collecting TCS under GST, check the above article.
Can we claim TCS under GST?
The TCS collected can be claimed as a credit by the seller through the GST portal. It's important to note that TCS provisions apply to specific goods, like alcohol and scrap, with the government specifying the TCS rate. Also, for more detailed information on the GST Registration for e-commerce collecting TCS under GST, check the above article.
Is GST registration mandatory for e-commerce?
GST registration is mandatory for all e-commerce sellers, traders, and aggregators selling goods or services online, excluding exempted categories. This requirement is outlined in Section 24(ix) and (x) of the Central Goods and Services Tax Act, 2017. Also, for more detailed information on the GST Registration for e-commerce collecting TCS under GST, check the above article.
How do I claim TCS deducted by e-commerce?
To claim TCS deducted, registered sellers on e-commerce portals can complete the "TDS and TCS Credit Receivable return" on the GST Portal. This filing process ensures that sellers obtain full credit for the TCS amount deducted. Simply log in to the portal, navigate to Services -> Returns -> TDS and TCS Credit Received, and follow the steps. Also, for more detailed information on the GST Registration for e-commerce collecting TCS under GST, check the above article.
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