Online portals selling tour packages and other services will be liable to deduct 1 per cent tax at source under the goods and services (GST) regime as they have been classified as e-commerce operators, the government has said.
Under the new indirect tax regime, an e-commerce company is required to collect 1 per cent of the net value of taxable supplies made through it. The amount so collected is called tax collected at source (TCS), but this provision has been temporarily put on hold.
The central board of excise and customs (CBEC), in a fresh set of frequently asked questions (FAQs) on Tuesday said the TCS requirement would not apply to someone selling own products through a website. Only applicable GST for the goods would be levied in that case.
E-commerce refers to supply of goods or services, including digital products, over electronic network and an e-commerce operator is a person who owns operates or manages the electronic platform for e-commerce, the CBEC said.
“Online travel agents providing services through digital or electronic platform will fall under the category of e-commerce operator liable to deduct TCS under section 52 of the CGST Act, 2017,” it said.
CBEC also clarified that the benefit of threshold exemption is not available to an e-commerce operator or a supplier on the e-commerce platform. Businesses with turnover up to Rs 20 lakh are otherwise exempt from GST.
The apex indirect tax authority said every e-commerce operator is liable to collect taxes on behalf of supplier and the tax has to be collected during the month in which the amount of collected from the recipient.
Besides, the tax amount collected by the operator will have to be paid to the government within 10 days after the end of the month in which the amount was collected.
The Central GST (CGST) Act empowers tax officials to seek information on supply or stock details from e-commerce operators. “Any officer not below the rank of the deputy commissioner may issue a notice to the electronic commerce operator to furnish such details within 15 working days from the date of service of such notice,” CBEC said in FAQs.
It further clarified that suppliers selling their own products through a website hosted by him will also fall under the definition of an e-commerce operator but there they need not deduct TCS. “In cases where someone is selling their own products through a website, there is no requirement to collect tax at source. These transactions will be liable to GST at the prevailing rates,” CBEC said.
Online travel firms welcomed the clarification but said some issues or the other would keep coming up and clarity will emerge after tax returns are filed in coming months.
“There are many practical issues. The trade is still confused over new rules under GST. But in due course of time it would be clear,” Amadeus India managing director Ankur Bhatia said.
Meanwhile, Niti Aayog vice-chairman designate Rajiv Kumar on Tuesday said the implementation of GST has brought down overall tax burden on the economy.
Kumar will replace incumbent Arvind Panagariya who is leaving the government think-tank on August 31. “Overall tax burden on the economy has come down after the implementation of GST,” he said at an event here. The nationwide GST was rolled out on July 1, overhauling India’s convoluted indirect taxation system and unifying the $2 trillion economy with 1.3 billion people into a single market.