ASMT-10 notice due to TCS vs GSTR-3B mismatch for export of services under LUT – clarification needed

[Jatin Mandani]

I have received a notice in Form GST ASMT-10 for FY 2024–25 due to discrepancies noticed during scrutiny of GSTR-3B.

I am engaged in providing export of services to overseas clients through an international e-commerce marketplace. The supplies qualify as zero-rated export of services, and a valid LUT for the relevant financial year has been filed and approved.

The issue appears to be that:

• The e-commerce operator has reported TCS turnover in GSTR-2A/2B, and

• My taxable turnover in GSTR-3B is much lower, as most supplies are zero-rated exports reported separately, with only minor domestic taxable supplies.

The notice seems to have compared TCS turnover with taxable turnover and calculated tax accordingly, asking for an explanation.

My questions are:

1. Is this a common issue due to TCS reporting vs zero-rated exports under LUT?

2. Is it sufficient to reply explaining the nature of business, export of services, and LUT compliance, or is any tax payment required at the ASMT-10 stage?

3. What key points should ideally be covered in the reply to avoid escalation?

Any guidance from professionals or those who have faced similar ASMT-10 scrutiny would be appreciated.

[Sadanand Bulbule]

This type of notice is quite common when sales happen through e-commerce platforms. In simple terms, you should explain that the platform has shown your total sales, but in your GST return you pay tax only on taxable Indian sales, while most of your income is from export of services which is tax-free under GST due to LUT. Once this is clearly explained, such notices are usually closed and no tax payment is required at this stage.

 

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

You have to reply to the notice explaining the details of transactions, along with the turnover declared in the returns and the books of accounts. You are not required to pay any additional taxes. 

[KASTURI SETHI]

Dear Querist, 

Whether it is export or domestic sale correct transaction value has to be declared in the returns. TCS has to be included in transaction value for the purpose of payment of GST. GST has to be paid on TCS. 

The issuance of ASMT-10 is an opportunity to defend yourself before the issuance of an SCN. 

I support the views of both experts in toto.

[KASTURI SETHI]

An illustration: If invoice amount is Rs. 500/- and TCS is Rs. 10/- GST has to be paid on Rs. 500/- and NOT on Rs.490/- (500-10). That may be one of the reasons for mismatch.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

 I do agree with the illustration of Sri Kasturi Sethi ji . GST is required to be discharged on the entire taxable value, though there was either TCS or TDS. 

[Raam Srinivasan Swaminathan Kalpathi]

For format of reply please use Form ASMT-11.  As this is a scrutiny notice u/s. 61 usually the department will not ask any documentary evidence.  Appropriate explanation in ASMT-11 should elicit a satisfaction from jurisdictional Suptt in Form ASMT-12.

[Ryan Vaz]

Yes, this is a very common issue where officers mechanically compare TCS turnover (gross value) with Table 3.1(a) taxable turnover in GSTR-3B, without adjusting for zero-rated export of services reported under LUT.

At the ASMT-10 stage, no tax payment is required if the mismatch is only due to classification and reporting differences.

A properly drafted ASMT-11 reply explaining exports, LUT, and reconciliation is generally sufficient to close the matter.

 

[KASTURI SETHI]

Regarding ASMT-11 also refer to serial No.13 of Issue ID  120584.

                          

[Shilpi Jain]

You can reply with the reasons for the difference noted in teh ASMT-10. Also provide some proofs that the supplies made by you are exports and not liable.

Ideally the e-com should not do TCS if you are doing exports as they are not liable to GST.

AI Summary

Mismatch between e-commerce TCS turnover in GSTR-2A/2B and GSTR-3B for LUT-backed export services; scrutiny may close without tax. Scrutiny in Form GST ASMT-10 is triggered where TCS turnover reflected in GSTR-2A/2B (gross supplies reported by an e-commerce operator) does not reconcile with taxable turnover disclosed in GSTR-3B, particularly when most supplies are zero-rated export of services under an approved LUT. The prescribed response is to file Form GST ASMT-11 explaining the nature of supplies, LUT-backed zero-rated exports, and providing a reconciliation of platform-reported turnover with books and return tables, supported by proof that the disputed supplies are exports and not taxable. It is also clarified that, for taxable domestic supplies, GST is payable on the full taxable value and not reduced by TCS/TDS. Proper reconciliation may result in closure in ASMT-12 without tax payment at this stage.