GST Council to define TCS on ONDC

New Delhi The GST Council on July 11 is expected to clarify on the TCS liability of suppliers engaged in e-commerce trading through Open Network Digital Commerce (ONDC) in cases where multiple operators are involved in a transaction.

ONDC or Open Network for Digital Commerce is a new initiative of the department for promotion of industry and internal trade (DPIIT). So far, there is no clarity on who should be liable for TCS compliance under GST laws. Under the Goods and Services Tax (GST) law, every e-commerce operator is required to collect TCS at the rate of one per cent of the taxable value of goods/services sold through its platform.

Sources said the Law Committee, comprising Centre and State tax officers, has recommended to the Council that in a situation where multiple e-commerce operators (ECOs) are involved in a single transaction through ECO platform, the TCS compliances is to be done by the supplier-side, who finally releases the payment to the supplier.

ONDC’s open network operates in two models -- inventory model and marketplace model. Under the inventory model, a buyer places an order with an e-commerce platform, who then pays the supplier of the goods or services.

Here, TCS is deducted by the e-commerce platform while making payment to the seller. The confusion regarding liability of TCS deduction arises in the case of the market place model -- where two intermediaries are involved in a single transaction.