The GST council has finally given some relief to the e-commerce retailers in hope to reduce the compliance as well as saving the capital for the same. The giants like Amazon and Flipkart were the first among the queue which was raising the issues and concern on the Tax Collected at Source clause after it was presented at the council’s meeting. The new draft law has proposed that the TCS will now be deducted at 1 percent and will be no limit thereof. The cap has assured that the levy will not surpass this given rate of tax.
A senior government official remarked that, “The council has decided to provide for up to 1 per cent TCS” also mentioned that the CGST and IGST will be presented in the second half of the budget session beginning March 8 as both of them has been discussed and approved by the GST council on a priority basis. In a different viewpoint of the story, the industry has demanded to complete wash out the TCS clause so as the reason emerged of increased transactional cost and compliance burden thereby increasing overall hardship. The industry also mentioned that the clause will discourage the sellers to choose the online platform as a method to retail the products as the clause hinders the productivity as well as block the capital also.
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Pratik Jain, indirect tax leader, PwC India stated some of the points in order to share the fact that, “E-commerce industry would be relieved to see TCS capped at 1 per cent. In any case, the purpose of TCS is to track the sales by the vendors on e-commerce platforms which can be achieved with a much lower rate (than 1 percent) as well,” “They would also hope to get clarity as to whether registration for TCS would be state-specific or on a centralized basis through IGST mechanism.” he added
A global level finance giant Morgan Stanley has speculated that the Indian e-commerce industry will see a rise of market up to 119 billion USD by the year 2020 and stated the fact a lot of job creation is under process as to serve this increasing opportunity. Bipin Sapra, partner, EY said that “While it helps that the value of TCS has been capped, the fact that both e-commerce companies and vendors will still have to do substantial compliance and their money will be stuck in the system will impact the sector negatively.”
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