Goods and Services Tax (‘GST’) laws provide that every Electronic Commerce Operator (‘ECO’)[1], not being an agent, is required to collect tax at source (‘TCS’) on the net value of taxable supplies made through it by other vendors, where the consideration for such supply is to be collected by the ECO. Although GST was introduced with effect from July 1, 2017, the provisions relating to TCS were kept in abeyance thus far. The Central Board of Indirect Taxes and Customs has now notified that the provisions pertaining to TCS would be applicable from October 1, 2018. Further, the rate of TCS has been notified to be 1% (0.5% Central GST + 0.5% State GST for intra state supply; or 1% Integrated GST for inter-state supply). Accordingly, ECOs would be required to collect 1% TCS on the net value of each taxable supply made through them with effect from October 1, 2018.

[1] ECO has been defined under GST to mean as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. As the GST laws do not provide for centralized registration, every ECO (foreign or domestic) is required to obtain registration with GST authorities in each State where the vendors might be supplying from through such ECO, before October 1, 2018.