In September 2018, the Indian government stipulated that all e-commerce companies will be subject to TCS tax from October 1, 2018. In order to comply with the corresponding provisions of TCS, all companies must register in each state, and this provision also applies to all foreign companies serving Indian consumers.
It is worth mentioning that many companies have proposed to replace repeated registrations in multiple states with a single registration, which can avoid the increase in compliance costs because the products of an e-commerce platform may come from different states in India. But the government has so far insisted that companies must register in all states. However, according to the reform trend of the Indian government in recent years, companies can still give the government hope for a single registration.
According to regulations, for goods sold within the state with a value of more than 250,000 rupees, the companies that receive the notice must be deducted 1% of the state GST and 1% of the central GST, while for goods circulated across states with a value of more than 250,000 rupees, the TDS tax to be deducted will be 2% of the IGST (Integrated GST, inter-state consumption tax). It is understood that the TDS/TCS tax is to record all transactions in the e-commerce industry and is intended to check tax evasion. However, overseas sellers who sell on non-Indian e-commerce platforms, such as Chinese sellers who build their own websites in India, do not need to pay TCS.
This is not entirely a bad thing for sellers on the platform, because the policy allows sellers with excess credits for input tax credits (ITC) to apply for tax exemption, which will save sellers some of the funds that are trapped in refund difficulties.