E-Commerce Companies to Register in All Operating States to Collect TCS

E-Commerce Companies to Register in All Operating States to Collect TCS
(Last Updated On: November 18, 2020)

Attention all online business owners! You will now need to register in all operating states in order to collect TCS.

Initially, businesses didn’t have to be registered in every state they function, to collect TCS. A GST registration or a GSTN would suffice.  Now, it is mandatory for businesses to register in every state and Union Territory they operate in, irrespective of GST or GSTIN. Additionally, they are supposed to deduct 1% tax collected at source (TCS) from October 1, 2018, before making payments to the suppliers.  

Here, is everything you need to know about the registrations and the procedure for collecting TCS.

What are TCS taxes?

As per Legalraasta, Tax Collected at Source (TCS) is an income tax which is payable by the seller who collects in turn from the buyer and it is provided under section 206C of Income Tax Act, 1961.

Classification of Seller for TCS:

As per Legalraasta, individuals and organizations who sell any goods or services, fall under the following categories:

  • Central Government
  • State Government
  • Local Authority
  • Statutory Corporation or Authority
  • Company
  • Partnership Firms
  • Co-operative Society
  • Under the Section 44AB if any Individual or a Hindu Undivided Family (HUF) who has total sales or gross receipts that exceed the specified monetary restricts as mentioned in the last year.

What are the changes in order to collect TCS now?

Domestic and local companies are to register in every state or Union Territory they operate to collect the TCS. Foreign companies that operate in India, are to register with the help of “agents” for the same. Additionally, the CBIC (Central Board of Indirect Taxes and Customs) have come out with a list of 20 FAQ’s to address possible industry related queries. The FAQ’s also have the modalities to the followed by the e-commerce companies for deducting TCS.

How to obtain the TCS registration?

To obtain the TCS registration, the e-commerce business should declare the Head Office as its primary location where major operations happen, irrespective of whether the business has a physical presence or not.

Documents needed for TCS registration:

These companies are to furnish digital statements which contain the following:

  • Outward supply of goods and services
  • Goods and services returned
  • Amount collected as TCS during a month within 10 days after the end of the month in the Form GSTR – 8.

Additionally, the companies should also file their annual statements by the end of every fiscal year, in which the tax was collected under the Form GSTR – 9B.

Disclaimer: Information in this article is intended only to provide a general overview and is not intended to be treated as legal advice. Please consult a tax expert to get a better understanding of the GST Laws.

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