Summary of "ECO under GST - RCM, Registration, TCS, Penalty Crux Points | CA Final IDT Nov'24 | CA Akshansh"

Summary of the Video

“ECO under GST - RCM, Registration, TCS, Penalty Crux Points | CA Final IDT Nov‘24 | CA Akshansh”

This video by CA Akshansh explains key concepts, provisions, and recent amendments related to Electronic Commerce Operators (ECO) under GST. The focus is on Reverse Charge Mechanism (RCM), registration requirements, Tax Collected at Source (TCS), and penalties. The content is designed for CA Final students preparing for the November 2024 Indirect Tax (IDT) exam.

Main Ideas, Concepts, and Lessons

1. What is an Electronic Commerce Operator (ECO)?

An ECO is an online platform connecting buyers and sellers (e.g., Amazon, Ola, Oyo, Urban Company, Swiggy).
Suppliers list goods or services on the ECO platform; customers make payments to the ECO, not directly to the supplier.
ECO collects TCS (Tax Collected at Source) on payments made to suppliers.

2. TCS and GST Liability in ECO Transactions

When a supplier sells goods/services via ECO, the ECO deducts TCS (typically 1%) and deposits it with the government.
The supplier receives credit for the TCS deducted and pays the remaining GST liability.
Example: If GST is 12% on a sale of ₹1 lakh, ECO deducts 1% TCS and pays ₹99,000 to the supplier. The supplier then pays the remaining 11% GST after adjusting the TCS credit.

3. Special Cases Under Section 95 (Reverse Charge Mechanism - RCM)

Applies to certain services supplied through ECO platforms such as transportation (Ola), accommodation (Oyo), housekeeping (Urban Company), and restaurant services (Swiggy).

Transportation Services (e.g., Ola drivers)

ECO is liable to pay GST compulsorily, regardless of whether the supplier (driver) is registered.
The driver does not pay GST; ECO pays the entire tax.

Accommodation Services (e.g., Oyo hotels)

If the hotel is registered, it pays GST; ECO deducts TCS.
If unregistered, ECO pays the GST.

Housekeeping (Urban Company) and Restaurant Services (Swiggy)

Registered suppliers pay GST; ECO deducts TCS.
Unregistered suppliers: ECO pays GST directly.

Exceptions

Big hotels/restaurants with declared tariffs above ₹7,500: supplier pays GST, not ECO.

Amendment for Omnibus (Bus) Services

If the supplier is a company, the supplier pays GST.
If the supplier is an individual or partnership, ECO pays GST.

4. Registration Requirements for Suppliers Using ECO

Previously, compulsory GST registration was required for suppliers selling goods through ECO regardless of turnover.
For services through ECO, a threshold exemption of ₹20 lakhs applies.
New amendment:
- Interstate supply of goods through ECO no longer mandates compulsory registration if turnover is under ₹20 lakhs.
- Supplier must obtain an enrollment number via the GST portal to supply goods through ECO without registration.
- Enrollment number is state-specific; only one state per enrollment.
ECO must verify:
- PAN of unregistered suppliers.
- Whether supplies are interstate.
- Validity of enrollment number.
Failure to comply results in penalties for the ECO.

5. Penalties on ECO under GST

ECO is liable for penalties if it allows unregistered persons to make interstate supplies without proper documentation.
Penalty can be the higher of ₹10,000 or 100% of the tax due.
ECO cannot shift blame to suppliers; it must ensure compliance.

6. Composition Scheme and ECO

Earlier, suppliers doing interstate supplies of goods (including through ECO) were not eligible for the composition scheme.
Amendment allows suppliers to do interstate supply of goods through ECO and still be eligible for the composition scheme, provided other conditions are met.

Detailed Points on Methodologies and Instructions

TCS Deduction by ECO

ECO deducts 1% TCS on the sale amount.
Supplier receives net payment after TCS deduction.
Supplier claims credit for TCS and pays remaining GST liability.

Section 95 RCM Provisions

Transportation services via ECO: ECO pays GST compulsorily.
Accommodation services via ECO: ECO pays GST if supplier unregistered; supplier pays if registered.
Housekeeping and restaurant services: same as accommodation.
Big hotels/restaurants with tariff > ₹7,500 pay GST themselves.
Omnibus services:
- Company suppliers pay GST themselves.
- Individuals/partnership suppliers: ECO pays GST.

Registration & Enrollment

Goods suppliers through ECO must register if turnover exceeds ₹20 lakhs (interstate supply).
For interstate supply under ₹20 lakhs, supplier can get enrollment number instead of registration.
Enrollment number is state-specific and obtained via GST portal.
ECO must collect PAN and enrollment number from unregistered suppliers.
ECO must verify interstate nature of supply.

Penalties on ECO

ECO penalized for allowing unregistered persons to supply interstate goods without compliance.
Penalty = higher of ₹10,000 or 100% of tax due.
ECO must maintain records and ensure compliance.

Composition Scheme

Interstate supply of goods disqualifies suppliers from composition scheme.
Amendment allows interstate supply of goods through ECO while retaining composition scheme eligibility.

Speaker

CA Akshansh – The sole speaker and presenter of the video content, providing explanations and examples tailored for CA Final students.

This summary captures the core concepts, practical examples, and recent amendments explained in the video related to ECO under GST, focusing on RCM, registration, TCS, penalties, and composition scheme implications.