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The e-commerce industry in India has witnessed rapid growth, and with it, the government has introduced specific compliance requirements under the Goods and Services Tax (GST) regime. One such key provision is Tax Collection at Source (TCS), which applies to e-commerce operators and sellers. Understanding the implications of TCS and the GST compliance requirements is crucial for online businesses to avoid penalties and ensure smooth operations.

What is Tax Collection at Source (TCS)?

Under Section 52 of the CGST Act, 2017, e-commerce operators facilitating sales of goods and services through their platform are required to collect Tax Collection at Source (TCS) at the rate of 1% (0.5% CGST + 0.5% SGST) or 1% IGST on the net taxable supplies made through their platform.

Who is Liable to Collect TCS?

Any e-commerce operator (like Amazon, Flipkart, or Myntra) that facilitates the supply of goods or services through its platform and collects consideration on behalf of sellers is responsible for collecting and remitting TCS.

TCS Applicability

TCS applies only to taxable supplies made through e-commerce platforms.
It is applicable when the e-commerce operator collects payments on behalf of the seller.
Exempt supplies and non-GST items are not subject to TCS.

GST Compliance for E-Commerce Sellers

1. Mandatory GST Registration

Unlike regular businesses, e-commerce sellers are required to obtain GST registration irrespective of their turnover, as per Section 24 of the CGST Act. The basic exemption limit of ₹40 lakh (for goods) and ₹20 lakh (for services) does not apply to them.

2. Monthly & Annual GST Returns

E-commerce sellers must comply with the following return filing requirements:

GSTR-1 (Monthly or Quarterly) – Details of outward supplies.
GSTR-3B (Monthly) – Summary return for tax payment.
GSTR-9 (Annually) – Annual return (if applicable).

3. Claiming Input Tax Credit (ITC)

The TCS collected by e-commerce operators is reflected in GSTR-2A/GSTR-2B of the seller.
Sellers can claim Input Tax Credit (ITC) for the TCS amount while filing their returns.

4. Reconciliation of TCS Details

E-commerce operators file GSTR-8 monthly, reporting TCS collected from sellers.
Sellers must reconcile their TCS credit with Form GSTR-2A to ensure proper ITC claims.

Exemptions & Exceptions

Small sellers supplying exempt goods/services do not fall under the TCS mechanism.
E-commerce operators facilitating services notified under Section 9(5) (like cab aggregators) directly pay GST, and sellers are not liable.

Penalties for Non-Compliance

Failure to comply with GST regulations can lead to:

Late fee and interest on delayed GST payments.
Penalties for incorrect filings or failure to collect/remit TCS.
Possible suspension or cancellation of GST registration for repeated non-compliance.

Conclusion

GST compliance, including TCS, is a crucial aspect for e-commerce sellers. Understanding the tax structure, ensuring timely filing of returns, and reconciling TCS credits can help sellers stay compliant and avoid legal complications. Partnering with a tax expert or using GST-compliant accounting software can further streamline compliance and enhance operational efficiency.

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as professional accounting, tax, or legal advice. While we strive to keep the content accurate and up to date, laws and regulations may change, and individual circumstances may vary. Readers are advised to consult with a qualified professional before making any financial or tax-related decisions. Gupta Nayar and Co. and the author disclaim any liability for actions taken based on the content of this article.

GUPTA NAYAR AND CO

QRMP Scheme: How It Works & Who Should Opt for It?

The Quarterly Return Monthly Payment (QRMP) Scheme was introduced under GST to ease compliance for small taxpayers. This scheme allows eligible businesses to file their GST returns on a quarterly basis while making monthly tax payments. It significantly reduces the compliance burden, making GST filing more convenient.

Who is Eligible for QRMP?

Taxpayers with an aggregate turnover of up to ₹5 crore in the previous financial year.
Those registered under GST and filing GSTR-3B.
Taxpayers who have opted for the QRMP scheme before the due date.

How QRMP Scheme Works?

Filing Frequency: GSTR-1 and GSTR-3B are filed quarterly instead of monthly.
Monthly Tax Payment: Taxpayers pay GST every month using either of the following methods:
- Fixed Sum Method (FSM): 35% of the last quarter’s tax liability or 100% of the previous month’s tax.
- Self-Assessment Method (SAM): Payment based on actual tax liability.
Invoice Furnishing Facility (IFF): Allows businesses to report B2B invoices monthly, ensuring that their buyers can claim input tax credit (ITC) without waiting for the quarter-end.

Benefits of QRMP Scheme

✅ Lower Compliance Burden: Reduces return filing frequency from 12 to 4 times a year. ✅ Better Cash Flow Management: Flexible tax payment options reduce immediate cash outflows. ✅ Seamless ITC for Buyers: With IFF, buyers can claim input tax credit every month. ✅ Reduced Late Fees: Since returns are filed quarterly, late fees for non-filing are reduced.

Who Should Opt for QRMP?

✔️ Small businesses with turnover below ₹5 crore. ✔️ Firms preferring quarterly filing for ease of compliance. ✔️ Businesses with steady or low tax liability to benefit from fixed sum payment. ✔️ Dealers whose buyers require regular ITC claims via IFF.

How to Opt for QRMP?

Login to the GST portal at www.gst.gov.in.
Navigate to ‘Services’ → ‘Returns’ → ‘Opt-in for Quarterly Return Filing’.
Select the desired financial year and quarter.
Confirm your choice and submit.

Final Thoughts

The QRMP scheme is a beneficial option for small businesses looking to simplify their GST compliance. However, businesses with frequent ITC requirements or fluctuating sales may need to evaluate their needs before opting in. Carefully analyze your tax liability and cash flow before making a decision!

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as professional accounting, tax, or legal advice. While we strive to keep the content accurate and up to date, laws and regulations may change, and individual circumstances may vary. Readers are advised to consult with a qualified professional before making any financial or tax-related decisions. Gupta Nayar and Co. and the author disclaim any liability for actions taken based on the content of this article.

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