Published on:
January 25, 2023
Shreeja Ray

TCS Under GST: A Beginner’s Guide

The tax that is collected from the buyer by the seller while the buyer is purchasing a certain category of products is known as TCS, or Tax Collected at Source. The TCS rate varies according to the type of goods, and the seller must deposit the tax they have collected from the customer with the government. In other words, TCS is a tax that the seller must pay to the government and then collects from the purchaser or lessee. According to Section 206 C of the Income Tax Act of 1961, the items that are subject to this tax are listed.

Who is responsible for collecting TCS on GST?

Certain operators who own, run, and oversee e-commerce platforms are responsible for TCS. TCS only applies when operators collect money from clients on behalf of suppliers or vendors. In other words, e-commerce operators must exclude TCS from the consideration paid to the suppliers before paying the net amount.

The TCS regulations for e-commerce platform services have the following exceptions:

1. Nightclubs and hotels (unregistered vendors)

2. Passenger transportation via motorbike, motorcab, or radio taxi

3. services such as plumbing, carpentry, and housekeeping (unregistered suppliers)

What is the TCS applicability rate?

After a 1% TCS deduction, dealers or traders that provide products and services through e-commerce operators would be paid.

In Notification No. 52/2018 under the CGST Act and 02/2018 under the IGST Act, the CBIC made the rate public.

This means that TCS at 1%, or 0.5% under CGST and 0.5% under SGST, will be collected on intra-state supplies. The IGST Act mandates that the TCS rates for transactions involving states be 1%.

How do I obtain the TCS Credit?

Registered Sellers of E-Commerce Portals can receive a full credit for TCS deducted by completing the "TDS and TCS Credit Receivable return" on the GST Portal.

How to File a Credit Receivable Return with TCS:

1. Register with the Portal.

2. Go to Services -> Returns -> TDS and TCS Credit Received to find this information.

3. Select a tax year and a financial year.

4. To prepare online, select.

5. Find the TCS Credit tab by navigating.

6. Accept the credit or reject it.

7. To file the refund, utilize DSC or EVC.

TCS deposit deadline

On the final day of the month in which the supply is made, TCS deposits are due. Within ten days after the supply month's end, it will be put to the government's credit.

The following methods will be used to pay the tax collected:

1. The IGST and CGST will be the responsibility of the central government.

2. State governments are liable for the SGST.

TCS on GST : Registration requirements provisions

The prerequisites for registration are as follows:

1. Each and every online merchant that is obligated to collect TCS must register with GST.

2. Anyone who makes a supply via an online retailer, with the exception of those who are required to notify the government under Section 9(5) of the CGST Act.

3. The following services are listed in Section 9(5): radio-taxi and motorbike passenger transportation OR hotel and guest house lodging for residential or lodging purposes (unregistered suppliers) OR housekeeping services such as plumbers, carpenters, and other tradespeople (unregistered suppliers).

4. In each of the three scenarios, the e-commerce operator is required to pay GST and follow all rules. Therefore, providers who offer the services indicated in 9 (5) and do not go above the Rs. 20 lakh (or Rs. 40 lakh) registration threshold are excluded from registration.

5. Additionally, service providers who conduct business through an e-commerce platform are not required to register if their combined annual revenue is less than Rs. 20 lakh or Rs. 40 lakh (assuming they do not make inter-state supplies).

6. Suppliers of goods who use an e-commerce platform are still required to register.

7. Every state where an e-commerce company sells goods or renders services requires that it register for GST.


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Updated on:
March 10, 2023