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Tax Collected At Source Under GST Regime
April, 24th 2017

Section 9 of the Act deals with levy and collection of tax.  Section 9(5) provides that the Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services.  Where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax.

Where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

Section 52 of the Act elaborately discusses the collection of tax at source.  Before knowing the procedure for collection of tax at source we may see definitions for some terms.

Electronic Commerce operator

Section 2(45) defines the term ‘electronic commerce operator’ as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

Electronic Commerce

Section 2(44) defines the term ‘electronic commerce’ as the supply of goods or services or both, including digital products over digital or electronic net work.

Net value of taxable supplies

The explanation to Section 52(1) defines the expression ‘net value of taxable supplies’ as the aggregate value of taxable supplies of goods or services or both, other than services notified under Section 9(5), made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.

Concerned supplier

The explanation to Section 52(14) defines the expression ‘concerned supplier’ as the supplier of goods or services or both making supplies through the electronic commerce operator.

Collection of tax

Section 52(1) provides that every electronic commerce operator, not being an agent, shall collect an amount calculated at such rate not exceeding 1% as may be notified by the Government on the recommendations of the Council, the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.  The power to collect the tax by this mode shall be without prejudice to any other mode of recovery from the operator.

Payment

Section 52(3) provides that the amount collected shall be paid to the Government by the operator within 10 days after the end of the month in which such collection is made. The amount collected  shall be paid by debiting the electronic cash ledger and the electronic tax liability register shall be credited accordingly.

Filing of Statement

Section 52(4) provides that every electronic commerce operator, who collects the amount shall furnish a statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected during a month, in Form GSTR – 8, within 10 days after the end of such month.  The details furnished by the electronic commerce operator shall be made available electronically to each of the suppliers in Part D of Form GSTR – 2A on the common portal after the due date of filing of Form GSTR – 8.

Annual Statement

Section 52(5) provides that every operator who collects the amount shall furnish an annual statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected during the said financial year, in such form and manner as may be prescribed, before the 31st day of December following the end of such financial year.

Rectification of statement

Section 52(6) provides that if any electronic commerce operator, after furnishing a statement discovers any omission or incorrect particulars therein, other than a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest.   No such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing the relevant annual statement, whichever is earlier.

Matching the details

Section 52(7) provides that the supplier who has supplied the goods or services or both through the electronic commerce operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the electronic commerce operator in such manner as may be prescribed. 

Section 52(8) provides that the details of supplies furnished by every electronic commerce operator shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under this Act in such manner and within such time as may be prescribed.

Section 52(9) provides that where the details of outward supplies furnished by the operator do not match with the corresponding details furnished by the supplier the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.

Section 52(10) provides that the amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in the valid return or the electronic commerce operator in his statement for the month in which discrepancy is communicated, shall be added to the output tax liability of the said supplier, where the value of the outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the discrepancy is communicated in such manner as may be prescribed.

Section 52(11) provides that the concerned supplier, in whose output tax liability any amount has been added, shall pay the tax payable in respect of such supply along with interest at the rate specified on the amount so added from the date such tax was due till the date of its payment.

Rule 19 of Returns provides that the following details relating to the supplies made through an e-commerce operator, as declared in Form GSTR – 8, shall be matched with the corresponding details declared by the supplier in Form GSTR – 1-

  • GSTIN of the supplier;
  • GSTIM or UIN of the recipient, if the recipient is a registered person;
  • State of place of supply;
  • Invoice number of the supplier;
  • Date of invoice of the supplier;
  • Taxable value; and
  • Tax amount

For all supplies where the supplier is not required to furnish the details separately for each supply, the following details relating to such supplies made through an e-Commerce operator, as declared in Form GSTR – 8 shall be matched with the corresponding details declared by the supplier in Form GSTR – 1-

  • GSTIN of the supplier;
  • State of place of supply;
  • Total taxable value of all supplies made in the State through e-commerce portal; and
  • Tax amount on all supplies made in the State

Where the time limit for furnishing Form GSTR – 1 has been extended, the date of matching of the above mentioned details shall be extended accordingly.

Any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to the supplier electronically in Form GST MIS – 5 and to the e-commerce portal electronically in Form GST MIS – 6 through the common portal on or before the last date of the month in which the matching has been carried out.

A supplier to whom any discrepancy is made available may make suitable rectifications in the Statement of outward supplies to be furnished for the month in which the discrepancy is made available.

An operator to whom any discrepancy is made may make suitable rectifications in the statement to be furnished for the month in which the discrepancy is made available.

Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the input tax liability of the supplier in his return in Form GSTR – 3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically on the common portal in Form GST MIS – 5.

Furnishing of information

Section 52 (12) provides that any authority below the rank of Deputy Commissioner may serve a notice, either before or during the course of any proceedings under this Act, requiring the electronic commerce operator to furnish such details relating to-

  • supplies of goods or services or both effected through such operator during any period; or
  • stock of goods held by the suppliers making suppliers through such electronic commerce operator in the godowns or warehouses, by whatever name called, managed by such operator and declared as additional places of business by such suppliers

as may be specified in the notice.

Section 52(13) provides that every electronic commerce operator on whom a notice has been issued shall furnish the required information within 15 working days of the date of service of such notice.

Section 52(14) provides that any person who fails to furnish the information required by the notice served, shall without prejudice to any action that may be taken under Section 122, be liable to a penalty which may extend to 25,000/-

Registration

Section 24 (ix) of the Act provides that the persons who supply goods or services or both, other than supplies specified under Section 9(5), through such electronic commerce operator who is required to collect tax at source under Section 52 is compulsorily required to be registered under this Act.  Likewise every electronic commerce operator under Section 24 (x) is compulsorily required to be registered under this Act.

Any person required to collect tax at source shall electronically submit an application, duly signed, in Form GST REG – 07 for grant of registration through the common portal.  The proper officer may grant registration after due verification and issue a certificate of registration in Form GST REG – 06 within 3 working days from the date of submission of the application.   Where upon an enquiry or pursuant to any other proceeding under the Act, the proper officer is satisfied that a person to whom a certificate of registration has been issued is no longer liable to collect at source the said officer may cancel the registered and such cancellation shall be communicated to the said person in Form GST REG – 08.  The proper officer shall follow the prescribed procedure for cancellation of registration.

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