Firms Not Registered Under GSTN Need Not Pay Tax To E-Commerce Companies

The GST (Goods and Services Tax) Council has clarified that e-commerce companies in India need to collect TCS from sellers that have registered under the GST framework, as reported by The Hindu. Tax Collected at Source (TCS) is the tax payable by a seller to the e-commerce firm whenever he/she makes a sale on the platform.

“Since such suppliers are not liable for registration, e-commerce operators are not required to collect TCS on supply of services being made by such suppliers through their portal,” the FAQ (Frequently Asked Question) released by the Council said.

Suppliers whose annual aggregate turnover is less than Rs 20 lakh (Rs 10 lakh in special category states) are not required to register themselves under GST mandatorily.

E-Commerce firms have long complained that collection of TCS from such unregistered firms has not only increased their compliance costs but also hampered the ability of these MSMEs (Medium Small and Micro Enterprises) to grow since their operating capital was locked up with the e-commerce companies as TCS.

“Some of these clarifications like no deduction of TCS on supplies by unregistered persons, assigning of an administrative jurisdiction in states where e-commerce players do not have a place of business, were quite sought for by the e-commerce players and should aid easier implementation of this compliance by them,” EY Tax Partner Abhishek Jain, stated.

Also Read: Why One Per Cent TDS On E-Commerce Sales Is Not Such A Bad Idea