Pay Levy Twice If Two Online Retailers Are Involved In A Sale Of Product

Bloomberg Quint |
Amit Kumar Sarkar , Partner & Head
Indirect Tax
|

09 August 2017

Purchases involving more than one e-commerce companies will be treated separately and a 1 percent tax collectible at source will be deducted by every online operator involved in the transaction, the Central Board of Excise and Customs clarified in a set of frequently asked questions.

This means, if a purchase is made online and involves two e-commerce players, TCS would be deducted by both e-commerce companies.

Under the Goods and Services Tax regime, 1 percent TCS will be deducted by an online retailer when it makes payments to its suppliers. The levy, aimed at creating an audit trail, is yet to be notified as the GST Council had deferred it.

To explain it better, if flight tickets are bought on Paytm, and Paytm sources the tickets from another online portal like EaseMyTrip, both the portals will deduct TCS from the supplier. EaseMyTrip would be a supplier for Paytm, and the airline company would be a supplier for EaseMyTrip.

The need to deduct TCS for every transaction is to provide administrative clarity, Amit Sarkar, head of indirect tax at tax advisory BDO India, told BloombergQuint. “The sellers who pay the TCS would get credit against their respective output GST liability.”

The indirect tax authority clarified that if a supplier is selling products on his own website, he will not be liable to deduct TCS.

Exempted Items Not Liable For TCS

GST-exempted products like books bought on e-commerce websites will not be liable for 1 percent TCS levy. “When the supply itself is not taxable, the question of TCS does not arise,” CBEC said.