GST Impact on TCS

Tally Solutions |Updated on: May 13, 2022

Introduction to TCS in GST
When and who is liable to collect TCS in GST
TCS in GST to be collected on what amount
Rate of TCS under GST
TCS under GST with example

Introduction to TCS in GST

In GST, the obligation to collect tax at source has been placed upon Electronic Commerce Operators and no other class of suppliers.

TCS refers to the tax which is collected by the e-commerce operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the e-commerce operator. The e-commerce operator should collect the TCS at 1% from the suppliers.

When and Who is Liable to Collect TCS in GST?

The TCS provisions under GST explains that an e-commerce operator is the one who is required to collect (by way of deduction) tax from the payment to be made to the suppliers of goods and services, who had supplied such goods and services using e-commerce operator’s platform.

Such amount is required to be collected on earlier of the following two events:

Time of credit of amount to the accounts of actual supplier of goods and/or services.
Time of payment of amount to such suppliers - Tax has to be collected from the amount payable or paid to the supplier, representing consideration towards the supply of goods and/or services made through it.

TCS in GST to be Collected on What Amount

TCS under GST has to be computed on the net value of taxable supplies. For this purpose, the net value of taxable supplies computation shall be made in the following manner:

The aggregate taxable value of goods and or services (i.e., the value of goods before GST computation)	Rs. XXX
Less: The specific categories of services, the tax on intra-State supplies of which shall be paid by the electronic commerce operator	Rs. XXX
Less: Aggregate taxable value of returned goods and or services	Rs. XXX
The net value of taxable supplies for the purpose of computation of TCS under GST	Rs. XXX

Rate of TCS Under GST

The operator shall collect tax @ 1% of the net value of taxable supplies made through it by other suppliers.

TCS Under GST with Example

A better understanding of TCS provision under GST could be claimed from the example given below :

Sale price of goods for goods sold through an e-commerce operator (say Sarees), the taxable value of which is (50 No’s X 200 per saree)	Rs. 10000
CGST @ 14%	Rs. 1400
SGST @ 14 %	Rs. 1400
Total Invoice value	Rs. 12800
Taxable value of services (Commission) charged by the e-commerce operator	Rs. 200
Returned goods value by e-commerce operator (10 Nos X 200 per saree)	Rs. 2000
Bill value raised by the e-commerce operator	Rs. 11000
How to calculate TCS under GST in the given example? TCS to be collected on aggregate value taxable value supplies (Goods + Services) = Rs. 10,000 (+) Rs. 200 = Rs. 10,200 TCS rate in GST = 1% (CGST 0.5% and SGST 0.5%) TCS to be computed on the net value of taxable supplies (see the formulae above) Net value in the given case would be Rs. 10,200 (-) Rs. 2,000 = Rs. 8,200/- In the given example TCS to be collected by the e-commerce operator would work out as: Rs. 8,200 x 0.5% = Rs. 41 (CGST) Rs. 8,200 x 0.5%. = Rs. 41 (SGST)