The government has decided to defer a goods and services tax provision that requires ecommerce companies to collect tax at source while making payment to vendors and suppliers until April, giving much respite to online retailers.
According to GST rules, ecommerce players are required to collect 1 per cent tax collected at source (TCS) on payments to suppliers of goods in excess of Rs 2.5 lakh. The government on Friday notified that this provision will not come into effect until April next year. “Now there is absolute clarity that you don’t have to do TCS at least for this financial year,” said Krishan Arora, partner at Grant Thornton India LLP.
“This is absolutely positive news because they (ecommerce companies) were already grappling with multiple compliance requirements for filing of returns,” he said. “They will at least be able to smoothen their compliance for the regular transaction and ultimately when the systems are in place they will probably be better alignment with their vendor database.”
Spokespersons of Amazon and Flipkart were not immediately available for comment. In June, the finance ministry had already deferred the TCS once when the government announced switching to the new GST regime.
“We are all for the TCS but the GST network is not ready and when the GST network is not ready implementing TCS was not a good option because then reconciliation and all those issues would have happened,” said a vendor who sell on ecommerce sites. “That was bad for the sellers if there was any problem due to that.”