E-commerce cos to deduct 1 pc TCS under GST from Oct 1

E-commerce companies will from October 1 have to deduct 1 percent tax collected at source (TCS) before making payments to their suppliers.

The Finance Ministry Thursday notified TCS at the rate of 0.50 percent of the net value of intra-state taxable supplies made through the e-commerce portals by other suppliers in the Central Tax law.

States too would follow suit and notify levy of 0.50 percent SGST on intra-state supplies.

In the case of inter-state supplies by the e-commerce companies, Integrated GST (IGST) at the rate of 1 percent would be deducted in the form of TCS while making payments to suppliers.

The ministry had last week notified October 1 as the date for implementation of the TCS provision under the Goods and Services Tax (GST) law. The law provided for levy of up to 1 percent TCS.

EY Tax Partner Abhishek Jain said, "As the law had provided a levy up to 1 percent, the e-commerce industry was awaiting this release of the exact rate of TCS --essentially to configure it into their system."

The GST, which subsumed over a dozen local taxes, was rolled out from July 1, 2017. However, to make it simpler for businesses in the initial months of a rollout, TDS/TCS provisions of GST laws were kept in abeyance till June 30. Later on, it was deferred until September 30, 2018.

TCS provision would increase the compliance burden for e-commerce companies but help the government in checking tax evasion.