From October 1, under GST law, E-commerce aggregators like Amazon, Flipkart and others need to deduct 1% tax for each of their transactions. This means that any registered dealer/trader on the platform will get paid only post deduction of the 1% tax. The GST clause also mandates dealers to register under GST irrespective of their turnover. E-commerce aggregators must deposit the deducted tax by the 10th day of the next month. But many e-commerce companies have missed the deadline of November 10 to pay a part of the outstanding tax of their sellers.
States Demand Physical Offices of Companies in the Region
The primary reason for TCS payments delay has been several state governments insistence on demanding physical local address of company offices in the respective region. In the absence of any particular physical office, TCS payments could not be made by these e-commerce companies
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Amazon India has told its sellers that it has not been able to collect TCS in 12 states due to “technical difficulties” on Tax Collection at Source (TCS) for October. With festive season at its peak, most e-commerce companies recorded immense traffic and sales on their platforms. The Economic Times reported last week that many e-commerce companies have not been able to make registration for some TCS payments in some states as they are demanding the opening of a physical office in the state.
However, the central government has said that e-commerce companies can register in states using the address of the particular head office. Opening physical offices in every state is not necessary.
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Technical Glitches
Amazon, a major e-commerce giant, reportedly informed its sellers that the deadline was missed owing to “technical difficulties”. E-commerce aggregators are working in close quarters with GST Authorities to overcome technical glitches. The company has reportedly been unable to collect 1% TCS in Gujarat, Punjab, Goa, Bihar, Chandigarh, Chhattisgarh, Meghalaya, Assam, Himachal, Jammu and Kashmir, Andaman and Nicobar and Lakshadweep. There are also concerns that e-commerce companies will have to pay heavy penalties for the delay.