78. TDS & TCS under GST | CA Raj K Agrawal

Summary

This video covers the distinctions between suppliers and Electronic Operators (EOs) in e-commerce, focusing on how businesses can sell both their own and others' goods through platforms. It delves into the mechanics of tax deduction and collection under GST laws, including TDS and TCS rates, specific exemptions, and the requirements for contractors. The speaker emphasizes the importance of understanding when TDS applies, particularly in government contracts, and provides practical tips for compliance with tax regulations to avoid errors in exams or real-world business practices.

Takeaways

• 😀 E-commerce platforms allow individuals to sell their own goods as well as list goods from other suppliers, acting as a facilitator between the buyer and seller.
• 😀 When you sell goods on your website, you are a supplier, but if you connect other sellers and handle orders, you become an Electronic Operator (EO).
• 😀 An EO only facilitates the sale, not fulfilling the order or billing the customer directly. The supplier handles fulfillment and billing.
• 😀 The role of an EO is to provide a platform where buyers and sellers can meet, but the actual transaction occurs between the buyer and the seller.
• 😀 TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) are key aspects of tax compliance in e-commerce and business transactions.
• 😀 TDS is applicable under Section 51 when the contract amount exceeds Rs. 1 lakh. The TDS rate varies based on the tax jurisdiction (CGST/SGST).
• 😀 TDS should be deducted within 10 days of the end of the month and a certificate of deduction must be issued within 5 days of deduction.
• 😀 If a contract involves goods or services worth more than Rs. 1 lakh, tax deductions must be made, but it's important to understand the scenarios when it is not applicable.
• 😀 In cases where the place of supply is in one state, and the government department's registration is in a different state, TDS is not required to be deducted.
• 😀 It is essential to differentiate between the supplier and EO in terms of tax compliance and responsibilities in e-commerce transactions.
• 😀 A strong understanding of tax laws related to TDS and TCS ensures the correct handling of payments and avoids complications in e-commerce operations.

Q & A

What is the role of an E-commerce Operator (EO) in a transaction?

An E-commerce Operator (EO) connects buyers and sellers on a platform but does not fulfill the orders themselves. The EO facilitates the transaction, while the supplier directly handles the order fulfillment and billing.

How does the role of a supplier differ from an E-commerce Operator in an e-commerce setup?

A supplier sells goods directly, either by listing their own goods on a platform or selling to others. In contrast, an E-commerce Operator only facilitates the transaction by connecting the buyer and seller, but does not manage the goods or billing.

In an e-commerce transaction where the EO only facilitates the connection, who handles the order fulfillment?

The supplier handles the order fulfillment, as they are the ones who send the goods and handle the billing directly with the customer.

What is TDS and TCS in the context of GST, and how do they differ?

TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) are mechanisms for collecting tax. TDS is deducted by the deductor when a payment is made to the supplier, while TCS is collected by the seller from the buyer. TDS is typically used for services, and TCS is used in the sale of goods.

What is the TDS deduction rate under the CGST Act?

The TDS deduction rate under the CGST Act is 1%. It is important to note that CGST and AGST have different rates, with CGST typically at 1%.

What is the time limit for furnishing the TDS certificate after making a payment?

The deductor must provide the TDS certificate within 10 days from the end of the month when the payment was made.

In what cases is TDS not to be deducted according to the script?

TDS is not to be deducted when the place of supply is in one state and the registration of the government department is in another state. This scenario exempts TDS deduction.

How does the contract value influence TDS deduction?

TDS is applicable only when the contract value exceeds Rs. 1 lakh. If the contract amount is above this threshold, TDS must be deducted.

What is the significance of an E-commerce platform that allows others to list their goods?

Such platforms serve as intermediaries where buyers and sellers can meet. The platform facilitates transactions between third-party sellers and customers, while the sellers handle the goods and billing. The platform is not responsible for fulfilling the orders.

What must be kept in mind about the TDS deduction rate when referring to the CGST Act?

While the general TDS rate may seem like 2%, under the CGST Act, the TDS rate is 1%. This distinction is important to avoid confusion during tax deductions.