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All about TDS and TCS under GST

In this article we have discussed all about TDS and TCS under GST.The concept of Tax Deduction at Source (TDS) was there in the former VAT Laws. GST Law also mandates Tax Deduction at Source (TDS) vide Section 51 of the CGST/SGST Act 2017, Section 20 of the IGST Act, 2017 and Section 21 of the UTGST Act, 2017. GST Council in its 28th meeting held on 21.07.2018 recommended the introduction of TDS from 01.10.2018. TDS is to be deducted at the rate of 1% [i.e., 2% for CGST+SGST/UTGST or IGST] from the payment made or credited to the deductee.

Following would be the deductors of tax in GST under section 51 of the CGST Act, 2017 read with notification No. 33/2017-Central Tax dated 15.09.2017:

(a) a department or establishment of the Central Government or State Government.

(b) local authority.

(c) Governmental agencies.

(d) an authority or a board or any other body, –

  •  set up by an Act of Parliament or a State Legislature.
  •  established by any Government, with fifty-one per cent. or more participation by way of equity or control, to conduct any function.

(e) a society proved by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of1860).

(f) public sector undertakings.

Concept of TCS under GST

In this post  i explained the main provisions relating to Tax collected at Source i.e. TCS.We have generally learn about tds (Tax Deducted at source ) but as per section 206C ,tax is to collected on sale also ,the concept of TDS and TCS is to get tax collected from the assessee so that he must be assessed under the Income tax act and Every electronic commerce operator (“operator”), not being an agent, shall collect TCS at prescribed rate when taxable supplies are made through it by other suppliers and the consideration with respect to such supplies is to be collected by the operator.

There are many e-commerce operators, like Amazon, Flipkart, Myntra, etc. running in India. These e-commerce operators display on their portal products as well as services which are supplied by some other person to the consumer. The goods or services belonging to other suppliers are displayed on the portals of the e-commerce operators and consumers buy such goods/services through these portals. On placing the order for a particular product/service, the actual supplier supplies the selected product/ service to the consumer. The price/consideration for the product/service is collected by the operator from the consumer and passed on to the actual supplier after the deduction of commission by the operator. The Government has placed the responsibility on the operator to collect TDS from the supplier. This shall be done by the operator by paying the supplier, the price of the product/ services, less the amount of TDS. And the rate of TCS under the section 52(1), TCS is to be deducted at the rate not exceeding 1% of the net value of taxable supplies of the goods/services supplied through the portal of the operator

Every person, being a seller, shall collect tax at source (TCS) from the buyer of goods specified under the section 206C (1).

Who is Seller? The Central and State Government, Local authority, Statutory corporation or Authority, Company, Firm, Co-operative society, Individual or Hindu undivided family (HUF) if covered under section 44AB (mandatory Audit), these entities are covered under the scope of the seller for TCS purpose.

Who is Buyer? Buyer Means a person who obtains in any sale, by way of auction, tender or any other mode, specified goods, or right to receive any such goods, but does not include, public sector company, Central/state Government, Embassy, a high commission, legation, consulate and the trade representation of a foreign state and A club.

Frequently asked questions :

Yes, every Government office shall get itself mandatorily registered under GST. Here the role of DDO is especially important as he is responsible for deducting tax while making/crediting payment under GST in applicable cases and, unless & until the process of registration is completed, the DDO will not be able to deduct any tax.

Yes. Tax must be deducted from the payment made/credited to a supplier, if the value of supply under a contract in respect of supply of taxable goods or services or both, exceeds Rs. 2,50,000/- (Rupees two lakh and fifty thousand).

Rate of TCS is 0.5% under each Act (i.e. the CGST Act, 2017 and the respective SGST Act / UTGST     Act respectively) and the same is 1% under the IGST Act, 2017. Notifications No. 52/2018 – Central Tax and 02/2018-Integrated Tax both dated 20th September 2018 have been issued in this regard. Similar notifications have been issued by the respective State Governments also.