Frequently Asked Questions
Does the ECO have an obligation to collect Tax collection at source (TCS)?
Every electronic commerce operator (ECO), who is not an agent and is responsible for collection of consideration for intra-State supplies (other than supplies for which it is a deemed supplier) made through it, has to collect an amount at notified rate not exceeding one percent for Central Tax and one percent for State Tax of ‘the net value of such supplies’*. In case of inter-State supplies tax at source need to be collected at notified rate not exceeding two percent. This is known as TCS.
*‘net value of taxable supplies’ shall mean the aggregate value of taxable supplies of goods or services or both [other than reverse charge services as per section 9(5) of CGST Act] made during any month by all registered persons and net of returns.
Every ECO responsible to collect tax at source has to take a mandatory registration under GST Act, whether or not separately registered under GST Act. ECO has to deposit this amount (TCS) with the appropriate government within 10 days of next month and has to file a monthly return containing the details of outward supplies made through it by 10th of next month. Subsequently the supplier of such supplies, for which tax has been collected at source by the ECO, can claim credit of such amount (TCS) in his electronic cash ledger. The provisions for TCS has not come into force yet. These will be brought into force once a notification specifying rate of TCS is issued.
When a supplier is selling exempted or zero-tax rate goods like printed books through it, the supply itself is not taxable and therefore the question of TCS does not arise.