What is the meaning of TCS return in the GST?

Since its introduction in July 2017, the Goods and Service Tax structure has seen several small and significant changes. Too many complications still make it necessary for businesses to seek help from tax experts. TCS or tax collected at source is one of the most discussed and complicated aspects within the GST. Here’re the key factors that you need to know about TCS. 

Tax collected from suppliers at source

Electronic Commerce Operators have to fulfil the necessary obligation of collecting tax at source from the suppliers of goods and services under Section 52 of the GST Act. The tax collected at source is referred to as TCS. At present, the TCS deducted needs to be one per cent of the net value of goods. 

Simply put, the tax is collected on behalf of the suppliers and is paid to the government.  It applies to all the suppliers (revenue exceeding twenty lakhs per annum) who provide products and service to the e-commerce portals. 

In their recent notification, the Central Board of Indirect Taxes and Customs has also clarified that e-commerce portals should not deduct TCS from entities (suppliers) who are not registered under GST. 

E-commerce companies also need to perform the cumbersome task of generating monthly and annual statements with information about outward supplies. Plus, they need to deposit the collected TCS amount for the prior month on the 10th of the next month.  Thus, online shopping companies had initially opposed the TCS measure before its rollout from October 2018.

The additional burden on small sellers 

Experts suggest TCS puts an additional burden on small sellers when it comes to the working capital. E-commerce companies also feel hassled as their money remains blocked for around 25 to 50 days.  

Another tedious requirement that foreign and domestic e-sellers need to fulfill for the collection of TCS is registering themselves in every state and union territory where their suppliers are located. Companies need to appoint a firm or individual as an agent in the state or union territories where they do not have a physical office.

E-commerce operators need to file a GSTR-8 form with a statement for details regarding TCS collected from various entities. Suppliers can check the TCS details submitted by the e-commerce firm in the GSTR 2A on the GST portal and claim credit, if any, accordingly. To make things easy and also to understand various GST provisions, you should surely consider attending GST Training in Ahmedabad if you live in Gujarat.

Several industry experts believe this has imposed unfair liability on the companies. Firms are forced to allocate funds, efforts, and time due to the new complicated tasks. The TCS framework does not cover offline vendors; thus, some suppliers might merely prefer to reduce their deals with e-commerce portals to avoid an extra headache. 

Economic policy experts feel this is an attempt from the government to bring more vendors under the GST umbrella and curb tax evasion. But the recent drop in the GST revenue indicates everything has proved to be little gain and too much pain.

What is the meaning of TCS return in the GST?