TCS Mechanism under GST

• August 2, 2020
• CA Chandan Agarwal's Office

TCS and TDS have some similar and dissimilar features. TDS refers to tax that is deducted when recipient makes some payments under a contract etc. whereas TCS refers to tax which is collected by the e-commerce operator when a supplier supplies through its portal and the payment for that supply is collected by the e-commerce operator.

Let us discuss the exact nature of TCS with an example. There are many e-commerce operators like amazon, Flipkart, Jabong etc. operating in India. These operators display/ list on their portal of the goods/services supplied by some other person to the consumer. The consumer buys such goods/services through these portals. On placing the order for particular goods/services, the supplier supplies the selected goods/services to the consumer. The price/ consideration for the product/services is collected by the Operator from the consumer and passed on to the supplier after deducting his commission by the Operator. It is the operator’s responsibility to collect tax at a rate of 1% from the supplier. The said amont will be calculated on the net value of Good/services supplied through his portal.Say  a certain product is sold at Rs. 1000/- through an Operator by a seller. The Operator would deduct tax @ 1% of the net value of Rs. 1000/- i.e. Rs. 100/-.

Read more on: https://taxguru.in/goods-and-service-tax/tcs-mechanism-gst.html