E-commerce companies like Snapdeal and Amazon will have to mandatorily deduct up to 1 per cent TCS (Tax Collected at Source) while making payments to their suppliers under the GST regime which is likely to start from 1st July, as per the media reports. The model Goods and Services Tax (GST) law, finalised by the GST Council, provides for 1 per cent TCS to be deducted by the e-commerce operators, said the PTI report.
The model law provides that every electronic commerce operator, not being an agent, shall collect up to 1 per cent TCS, as may be notified on the recommendations of the Council, of 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. Experts had raised concerns saying this would mean that a similar amount will have to be levied on inter-state movement of goods, taking the total TCS deduction to 2 per cent. "We have included the word 'up to' in the final model GST law.
This would mean that TCS would not exceed 1 per cent of the sale proceeds," an official said. Industry has been expressing concern over the TCS provisions saying it would mean a lock-in of capital and also dissuades companies from selling through online aggregators.