Important Keyword: Circular No. 194/06/2023-GST, TCS under GST, Section 52 CGST Act, Multiple E-Commerce Operators GST, ONDC GST, ONDC TCS, E-Commerce Operator GST, Buyer-side ECO, Seller-side ECO, GST TCS Clarification, GST on E-Commerce, Digital Commerce GST, CBIC Circular 194/06/2023,
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Table of Contents
File No. CBIC-20001/5/2023-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
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New Delhi, Dated the 17th July, 2023
Circular No. 194/06/2023 - GST: Clarification on TCS Liability Under Section 52 of the CGST Act, 2017 in Case of Multiple E-commerce Operators in One Transaction
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on TCS liability under Section 52 of the CGST Act, 2017 in case of multiple E-commerce Operators in one transaction.
Reference has been received seeking clarification regarding TCS liability under section 52 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), in case of multiple E-commerce Operators (ECOs) in one transaction, in the context of Open Network for Digital Commerce (ONDC).
2.1 In the current platform-centric model of e-commerce, the buyer interface and seller interface are operated by the same ECO. This ECO collects the consideration from the buyer, deducts the TCS under Sec 52 of the CGST Act, credits the deducted TCS amount to the GST cash ledger of the seller and passes on the balance of the consideration to the seller after deducting their service charges.
2.2 In the case of the ONDC Network or similar other arrangements, there can be multiple ECOs in a single transaction - one providing an interface to the buyer and the other providing an interface to the seller. In this setup, buyer-side ECO could collect consideration, deduct their commission and pass on the consideration to the seller-side ECO. In this context, clarity has been sought as to which ECO should deduct TCS and make other compliances under section 52 of CGST Act in such situations, as in such models having multiple ECOs in a single transaction, both the Buyer-side ECO and the Seller-side ECO qualify as ECOs as per Section 2(45) of the CGST Act.
3. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues as under:
Issue 1: In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier in the said supply, who is liable for compliances under section 52 including collection of TCS?
Clarification: In such a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier of the said goods or services, the compliances under section 52 of CGST Act, including collection of TCS, is to be done by the supplier-side ECO who finally releases the payment to the supplier for a particular supply made by the said supplier through him.
e.g.: Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits the balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the supplier after deduction of his fees/commissions and therefore will also be required to collect TCS, as applicable and pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.
In this case, the Buyer-side ECO will neither be required to collect TCS nor will be required to make other compliances in accordance with section 52 of CGST Act with respect to this particular supply.
Issue 2: In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said supply, who is liable for compliances under section 52 including collection of TCS?
Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making payment to the supplier for the particular supply being made through it.
e.g. Buyer-side ECO collects payment from the buyer, deducts its fees and remits the balance to the supplier (who is itself an ECO as per the definition in Sec 2(45) of the CGST Act). In this scenario, the Buyer-side ECO will also be required to collect TCS, as applicable, pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.
4. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
5. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs): Circular No. 194/06/2023 - GST
Q1. What is Circular No. 194/06/2023-GST?
Answer:
Circular No. 194/06/2023-GST clarifies who is responsible for collecting Tax Collected at Source (TCS) under Section 52 of the CGST Act when more than one e-commerce operator (ECO) is involved in a single transaction. The clarification primarily addresses business models like the Open Network for Digital Commerce (ONDC), where separate operators may handle the buyer and seller sides of the same transaction.
Q2. Why was this circular issued?
Answer:
The circular was issued because new e-commerce models such as ONDC involve multiple e-commerce operators participating in a single supply. This created uncertainty about which ECO should collect TCS and comply with Section 52.
In simple terms, the CBIC wanted to ensure that only one operator is responsible for TCS compliance, thereby preventing duplication of tax collection and reducing confusion for businesses.
Q3. What is TCS under Section 52 of the CGST Act?
Answer:
Tax Collected at Source (TCS) under Section 52 of the CGST Act requires specified e-commerce operators to collect a prescribed percentage of the net value of taxable supplies made through their platform and deposit it with the Government.
Many businesses actually face this issue because TCS is collected by the platform rather than the supplier. The supplier can later claim this amount in their electronic cash ledger while filing GST returns.
Q4. Who is responsible for collecting TCS when there are multiple e-commerce operators?
Answer:
Where multiple e-commerce operators are involved and the seller-side ECO is not the actual supplier, the seller-side ECO that finally releases payment to the supplier is responsible for collecting TCS and complying with Section 52.
The buyer-side ECO is not required to collect TCS in such cases because it does not make the final payment to the supplier.
Q5. What happens in an ONDC transaction where the buyer-side ECO collects payment?
Answer:
If the buyer-side ECO collects payment from the customer and transfers the amount (after deducting its commission) to the seller-side ECO, the seller-side ECO becomes responsible for TCS because it ultimately releases payment to the supplier.
Let’s understand this with an example. A customer places an order through App A (buyer-side ECO), while the seller is listed through App B (seller-side ECO). Since App B pays the supplier, App B must collect and deposit TCS.
Q6. What if the seller-side ECO is itself the supplier?
Answer:
In this situation, the responsibility changes.
Where the seller-side ECO itself is the supplier of the goods or services, the buyer-side ECO must collect TCS while making payment to that supplier. This is because there is no separate seller-side intermediary releasing payment to another supplier.
Q7. Is the buyer-side ECO always exempt from TCS compliance?
Answer:
No. The buyer-side ECO is exempt from TCS compliance only when the seller-side ECO releases payment to an independent supplier.
If you look at it practically, the buyer-side ECO becomes liable for TCS where the seller-side ECO itself is also the supplier. Therefore, businesses should first identify the role of each operator before determining TCS responsibility.
Q8. Does this circular apply only to ONDC?
Answer:
No. Although the clarification was issued in the context of ONDC, it applies to any arrangement involving multiple e-commerce operators in a single transaction.
This means that future digital commerce models with similar payment structures can also rely on the principles laid down in this circular for determining TCS liability under Section 52.
Q9. Does this circular change the TCS rate under GST?
Answer:
No. Circular No. 194/06/2023-GST does not amend the rate of TCS or introduce any new tax.
It merely clarifies which e-commerce operator is responsible for complying with Section 52, including TCS collection, payment to the Government, and filing the required GST returns.
Q10. What legal provisions are referred to in this circular?
Answer:
The circular primarily refers to Section 52 of the CGST Act, which governs TCS by e-commerce operators, Section 2(45) defining an e-commerce operator, and Section 168(1) empowering the CBIC to issue clarifications.
These provisions collectively determine which operator must collect TCS in transactions involving multiple digital commerce platforms.
Related Resource:
GST Compliance: https://finodha.in/gst-compliance/
Download PDF: Circular No. 194/06/2023 - GST
More Information: https://taxinformation.cbic.gov.in/
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