New TCS features for E-com and E-tailers under Composition Scheme

The e-tailers, as well as the e-commerce operators, have a piece of good news. The GSTN has made their compliance easier by introducing two new facilities on the GST portal from 1st September 2020. The press release by the GSTN on 1st September has elaborated the dynamics of these facilities.

First up, the e-commerce operators have been provided with the option to amend the GSTR-8 any number of times. Before this, the operators could amend table 4 details in their return only once. The amendment is allowed only when the seller on such e-commerce platform has rejected such TCS or has not taken any action in his ‘TDS/TCS credit received’ statement. 

Table 4 of GSTR-8 refers to the ‘Amendments to details of supplies in respect of any earlier statement’. The details that can be amended include GSTIN of the supplier, the value of supplies made, returned or assessable for TCS, and the components of GST such as IGST, CGST and SGST. Once the TCS is paid, and the operator files GSTR-8, the details will flow into the part-C of the GSTR-2A of the respective suppliers, also called e-tailers. 

The restriction of amending details only once has been removed. Henceforth, the e-commerce operator is allowed to amend the details multiple times. However, the last day of making such amendments for a given financial year remains unchanged. It is earlier of the due date to file the return for September of the following the end of that financial year or actual date of filing the annual return.

It is a welcome move as the operators usually faced challenges in revising the details declared in their return. There have been cases when the place of supply would not be adequately established, due to which the payment of taxes may be made to wrong heads. In other cases, the GSTIN of the seller may have been wrongly declared where the seller operates from different states. By providing an unlimited opportunity to amend similar to any regular taxpayer, an e-commerce operator will be allowed to report accurate details and avoid unnecessary hassles that may follow. 

Also Read: The GSTN Computes GSTR-3B Liability Using GSTR-1 Data

Secondly, the TCS facility has been extended to certain taxpayers who had opted for the composition scheme such as restaurant services. It means that restaurants under composition scheme can now view and take actions such as accepting or rejecting TCS credit received. Further, to enable this, the e-commerce operators can add the GSTIN of the composition taxpayer in their GSTR-8.  Accordingly, the composition scheme taxable persons will get the TCS credit in the statement known as the ‘TDS/TCS credit received’. 

As far as actions are concerned, the amount would be credited to the cash ledger of composition taxpayers for every accepted transaction, after the successful filing of ‘TDS/TCS credit received’ form. Whereas, the amount will be shown to e-commerce operators for correction in case of rejected transactions.

There are certain exceptions listed down when a person will not be eligible to go for a composition scheme under clause (d) of section 10(2) of the CGST Act. They cannot make any supply of goods through an electronic commerce operator who is required to collect TCS. The restaurant business involves the sale of both goods and services. It is considered a supply of service covered by Schedule II of the Act.

Hence, it could be registered under the composition scheme paying tax at a rate of 5% on turnover, while continuing to supply restaurant services on e-commerce platforms, notable ones such as Zomato, Swiggy, etc. Here, it is important to highlight two amendments for the composition scheme taxpayers brought about by the Finance Act, 2019 and Finance Act, 2020. 

Firstly, subsection 10(2A) in the CGST Act was newly inserted by Section 93 of the Finance Act 2019. It extended the 10(2) exceptions to taxpayers opting for a special composition scheme for service providers, as per CGST (Rate) notification number 2/2019 dated 7th March 2019. So, suppose a restaurant has registered under the special composition scheme paying lower tax at 3%.

In that case, it cannot make supplies over e-commerce platforms liable to collect TCS. The provision was implemented from 1st January 2020 vide CGST notification number 01/2020 dated 1st January 2020. Hence, the new TCS facility will not be available for such restaurant businesses registered under the special composition scheme since they cannot supply through e-commerce platforms, liable for TCS, in the first instance.

Secondly, Section 119 of the Finance Act 2020 amended the clause (d) of section 10(2) to say that composition taxpayers cannot make the supply of both goods and services via e-commerce operators liable to collect TCS. However, this is put on hold as the date of implementation is yet to be notified by the CBIC. Hence, until the date is notified, those restaurants covered by Section 10 of the composition scheme who are supplying through e-commerce platforms subject to TCS, can make use of this facility.

A detailed clarification in this regard by the CBIC should help the taxpayers in understanding the applicability of the facility in totality.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in