Surender Kumar in Lawyers and Attorneys, Business Law, Business Oct 9, 2019 · 1 min read · 1.6K

Tax Collected at source under GST

Tax Collected at source under GST


  • A tax collected by an operator belonging to e-commerce on the product sold to the consumer on behalf of the supplier or service provider is called Tax Collected at Source (TCS). These kinds of taxes are collected as a particular percentage of the taxable supplies.
  • Who can collect TCS on behalf of the supplier?

    The middleman or the person who owns the platform that connects the seller and the buyer is supposing the collect the TCS. The middleman can collect taxes only on behalf of the supplier. 

    Who can collect TCS from the Middlemen/E-Commerce Operator/Vendor?

    Taxes can only be collected by the following tax authorities:

    1. Government offices

    2. An authority,

    · Officially approved by a government

    · Arranged by a state assembly or act of parliament

    3. Local authorities

    4. Central or State Government division

    When TCS will be collected? 

    The vendor collected TCS from the buyer at the time of selling of goods. It is a concept where the vendor collects the TCS from the buyer at the rate which is decided by the government and collected tax deposited to the government.

    Percentage of tax to be collected

    Profits received by the seller are collected after charging 1% of TCS. This rate is confirmed by CBIC under CGST and IGST act. 

    I. If a supplier wants to make a supply within the state then total TCS collected will be 0.5 % of CGST and 0.5% SGST.

    II. But if the supplier wants to make an interstate supply than 1% of IGST will be charged.

    How to register?

    To collect TCS, it is mandatory for the middlemen to get registered. Here are the steps for the same:

    1. Collect the GSTRegistration Online Foam 07 from the GST portal.

    2. Fill the necessary details and sign it with the Electronic Verification Code.

    3. Hand over the form to an office just as informed by the commissioner either in hand or via the felicitation center. The best possible official will validate the registration.

    4. The certificate of registration will the generated within 3 business days by an official.

    What is the last date for depositing TCS?

    The last date to deposit TCS is within the last 10 days from the month of supply. This tax is credited to the government’s account in the following manner:

    • If IGST and CGST are supposed to be paid then the payment should be made to the central government.
    • If only SGST is supposed to be paid then the payment shall be done to state government.

    There are different viewpoints of the government as well as the e-commerce operators.

    Let us understand both of them starting with the government

    Government thinks that due to this implementation, the tax evasion will reduce to a huge extent since the tax will be collecting and recorded on every transaction.

    E-commerce operator's viewpoint

    The fact that they are supposed to register for each and every state they want to sell their products to holds back the SEMs vendor from selling their goods and expanding their business. 

    According to the government, all the registration was supposed to be done by Oct 1, 2018, which didn’t provide much time to register for all the states and the ERP system will have to integrate enough to implement these provisions every day. The working capital also gets blocked for the e-commerce operators until they claim the tax credit and this is the same reason why small vendors cannot supply goods online.