TCS liable for TCS compliance in e-commerce trading

In cases where multiple operators are involved in a transaction, the GST Council is expected to declare the TCS liability of suppliers participating in e-commerce trading through Open Network Digital Commerce. The ODC or Open Network for Digital Commerce is a new initiative by the department for promotion of industry and Internal Trade, which is not clear on who should be liable for TCS compliance under GST laws. Under GST, every e-commerce provider must collect TCS at the rate of 1 percent of the value of goods services sold through its platform. Sources said the Law Committee, consisting of Centre and state tax officers, has recommended the Council that in a situation where multiple e-commerce operators ECOs are involved in a single transaction through ECO platform, the TCS compliances should be done by the supplier-side, who finally releases the payment to the supplier. OnDC's open network operates in two models, namely, the inventory model and the marketplace model. Under the inventory model, a buyer places a order with an e-commerce platform, then pays the vendor of the goods or services. TCS is deducted by the e-commerce platform while making payment to the seller. The confusion surrounding liability for TCS deduction arises in the case of the market place model, where two intermediaries are involved in a single transaction. The buyer then places an order on an e-commerce platform buying app, which then sources it from another e-commerce vendor app. The vendor app then acquires the goods from the actual supplier. Since several parties are involved, the DPIIT has sought clarification as to whether the buyer-e-commerce operator or the seller-e-commerce company would be required to deduct the Tax Collected at Source TCS Sources said in this case, TCS would be required to be deducted by the seller app while making payment to the supplier. A clarification to this effect is likely to be issued by the GST Council on Tuesday. ONDC, which was established on December 31, 2021, is a section 8 company. The initiative by the DPIIT is an initiative to create a facilitative model for small retailers to take advantage of digital commerce. It is not an application, platform, intermediary, or software but a set of specifications designed to foster open, unbundled, and interoperable open networks. The GST Council had earlier extended mandatory registration for suppliers to e-commerce platforms in case of intra-state supplies, provided that the annual turnover of the provider is less than the GST registration threshold, which is 40 lakh for goods and 20 lakh for services.