The government has allowed e-commerce firms more time to file their returns. This move came as a respite to online retail companies, who are still uncertain about how they will be taxed. As per the GST laws, e-commerce operators must collect 1% Tax Collected at Source (TCS) on every payment to the retailer. So, the government has extended the initial date for online companies for filing; this will make their shift to new system more comfortable. However, the government hasn’t agreed to the three-month extension demanded by the e-commerce business people.
Need for more clarity
TCS will be applied from 1 October and a 10-day grace period is allowed. According to the GST rules, these firms must file returns by 10 November. Nevertheless, in some cases, the date can be delayed even more, if the Department finds the reason genuine. The government has updated the FAQ section to clarify every rule and address main concerns like a place for registering and rules for overseas firms among others. Representatives from the likes of Paytm, Myntra, Flipkart and Snapdeal had met government officials to shed light on TCS-related rules.
Need for easier process
Online retailers have requested for user-friendly procedures like a single registration system (instead of registering in many states). The ministry will probably accept this. There was also ambiguity about a tax on returned products owing to many reasons like the wrong product, the difference in sizes/ colours or faulty item. A ministry representative said that the supplier could request TCS refunds on cancelled/returned goods. So, the burden will not be on the e-retailer.
Likewise, they will not impose TCS on foreign/imported products. However, registration will be compulsory for overseas e-commerce portals, if the supplier is based in India. E-commerce operators are concerned that the new TCS inclusion will disturb the online marketplace ecosystem, especially at the onset of Diwali where these companies reap maximum income. However, this amount can help ministry meet their GST target (Rs 1 lakh crore) as well as increase compliance and curb evasion.