TDS and TCS Under GST

The chapter consists of Tax Deducted at Source and Collection of Tax at source.
Tax Deducted at Source (TDS) is one of the ways to collect tax based on certain percentages on the amount payable by the receiver on goods/services. The collected tax is a revenue for the government.

Who is liable to deduct TDS under GST law?
A. A department or an establishment of the Central Government or State Government; or
B. Local authority; or
C. Governmental agencies; or
D. Such persons or category of persons as may be notified by the Government.
As per the latest Notification dated 13th September 2018, the following entities also need to deduct TDS-
An authority or a board or any other body which has been set up by Parliament or a State Legislature or by a government, with 51% equity ( control) owned by the government.
A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.
Public sector undertakings.
What is TCS under GST
Tax Collected at Source (TCS) under GST means the tax collected by an e-commerce operator from the consideration received by it on behalf of the supplier of goods, or services who makes supplies through the operator’s online platform. TCS will be charged as a percentage on the net taxable supplies. The provision of TCS under GST is dealt under Section 52 of the CGST Act.
Who is liable to collect TCS under GST
Certain operators who own, operate and manage e-commerce platforms are liable to collect TCS. TCS applies only if the operators collect the consideration from the customers on behalf of vendors or suppliers. In other words, when the e-commerce operators pay the consideration collected to the vendors they have to deduct an amount as TCS and pay the net amount.

Here are few exceptions to the TCS provisions for the services provided by an e-commerce platform: 
Hotel accommodation/clubs (unregistered suppliers) 
Transportation of passengers – radio taxi, motor cab or motorcycle 
Housekeeping services like plumbing, carpentry etc. (unregistered suppliers)
For example – M/s.XYZ stores (a proprietorship) is selling garments through Flipkart. Flipkart, being an e-commerce operator, before it makes the payment of consideration collected on behalf of XYZ, will be liable to deduct TCS.
What is the rate applicable under TCS
The dealers or traders supplying goods and/or services through e-commerce operators will receive payment after deduction of TCS @ 1%. The rate is notified by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act. �
This means for an intra-state supply TCS at 1% will be collected, i.e 0.5 % under CGST and 0.5% under SGST. Similarly, for a transaction between the states, the TCS rate will be 1%, i.e under the IGST Act.

1. TDS and TCS under GST
By;
Mr. DayanandaHuded,
M.Com, NET, KSET, JRF
Mr. DayanandaHuded,
M.Com, NET, KSET, JRF
Teaching Assistant,
Rani Channamma University, P G Centre, Jamkhandi
E-Mail: [email protected]

2. Tax Deducted at Source

TaxDeductedatSource(TDS)isoneofthewaystocollecttaxbasedoncertain
percentagesontheamountpayablebythereceiverongoods/services.Thecollectedtaxis
arevenueforthegovernment.

WhoisliabletodeductTDSunderGSTlaw?

A.AdepartmentoranestablishmentoftheCentralGovernmentorStateGovernment;or

B.Localauthority;or

B.Localauthority;or

C.Governmentalagencies;or

D.SuchpersonsorcategoryofpersonsasmaybenotifiedbytheGovernment.

AsperthelatestNotificationdated13thSeptember2018,thefollowingentitiesalso
needtodeductTDS-

AnauthorityoraboardoranyotherbodywhichhasbeensetupbyParliamentoraState
Legislatureorbyagovernment,with51%equity(control)ownedbythegovernment.

AsocietyestablishedbytheCentraloranyStateGovernmentoraLocalAuthorityandthe
societyisregisteredundertheSocietiesRegistrationAct,1860.

Publicsectorundertakings.

3. 
WhenandtowhomshouldtheTDSbepaid?

TDSshallbepaidwithin10daysfromtheendofthemonth
inwhichtaxisdeducted.Thepaymentshallbemadetothe
appropriategovernmentwhichmeans:

TheCentralGovernmentincaseoftheIGSTandtheCGST

TheStategovernmentincaseoftheSGST

WhataretheprovisionsrelatingtotheissueofTDS
certificatesundertheGSTlaw?

SimilartotheIncomeTaxLaw,thepersondeductingtax
underGSThastoissuetheTDScertificateinformGSTR-7A
totheconcernedpersonwithin5daysofdepositingthetax
tothegovernment.However,GSTportalwillautomatically
makeGSTR-7Aavailabletothededucteeonthebasis
ofGSTR-7filed.

4. 
WhichformisrequiredtofiletheTDSreturn?

ThepersondeductingtaxisrequiredtofileaTDSreturnin
formGSTR-7within10daysfromtheendofthemonth.
WhenGSTINoftheunregisteredsupplierisnotavailable,
theirnamecanbementioned.Therobustnessofthesystem
reflectsthesefilled-indetailsintheelectronicledgerofthereflectsthesefilled-indetailsintheelectronicledgerofthe
supplier.

WhatisthebenefitofTDStothedeductee(Supplier)?

Asstatedabove,therewillbeanautomaticreflectioninthe
electronicledgerofthedeductee(supplier)oncethe
deductorfileshis/herreturns.Thededucteecanclaimcredit
inhiselectroniccashledgerofthistaxdeductedanduseit
forpaymentsofothertaxes.

5. Tax Collection at Source

WhatisTCSunderGST

TaxCollectedatSource(TCS)underGSTmeansthetaxcollectedbyane-commerceoperatorfromthe
considerationreceivedbyitonbehalfofthesupplierofgoods,orserviceswhomakessuppliesthrough
theoperator’sonlineplatform.TCSwillbechargedasapercentageonthenettaxablesupplies.The
provisionofTCSunderGSTisdealtunderSection52oftheCGSTAct.

WhoisliabletocollectTCSunderGST

Certainoperatorswhoown,operateandmanagee-commerceplatformsareliabletocollectTCS.TCS
appliesonlyiftheoperatorscollecttheconsiderationfromthecustomersonbehalfofvendorsorappliesonlyiftheoperatorscollecttheconsiderationfromthecustomersonbehalfofvendorsor
suppliers.Inotherwords,whenthee-commerceoperatorspaytheconsiderationcollectedtothe
vendorstheyhavetodeductanamountasTCSandpaythenetamount.

HerearefewexceptionstotheTCSprovisionsfortheservicesprovidedbyane-commerceplatform:

Hotelaccommodation/clubs(unregisteredsuppliers)

Transportationofpassengers–radiotaxi,motorcabormotorcycle

Housekeepingserviceslikeplumbing,carpentryetc.(unregisteredsuppliers)

Forexample–M/s.XYZstores(aproprietorship)issellinggarmentsthroughFlipkart.Flipkart,beingan
e-commerceoperator,beforeitmakesthepaymentofconsiderationcollectedonbehalfofXYZ,will
beliabletodeductTCS.

7. 
WhatistherateapplicableunderTCS

Thedealersortraderssupplyinggoodsand/orservicesthroughe-commerceoperatorswill
receivepaymentafterdeductionofTCS@1%.TherateisnotifiedbytheCBICin
Notificationno.52/2018underCGSTActand 02/2018underIGSTAct.

Thismeansforanintra-statesupplyTCSat1%willbecollected,i.e0.5%underCGST
and0.5%underSGST.Similarly,foratransactionbetweenthestates,theTCSratewillbe
1%,i.eundertheIGSTAct.1%,i.eundertheIGSTAct.

DuedatefordepositingTCS

TCSwillbedeductedduringthemonthinwhichthesupplyismade.Itwillbedeposited
within10daysfromtheendofthemonthofsupplytothecreditofthegovernment.

WhenwilltheliabilityofcollectingTCSarise

TCSwillbecollectedbye-commerceoperatorswhilemakingapaymenttothevendor.This
paymentwillbetheconsiderationcollectedonthevendor’sbehalfforthesuppliesmade
byhimviatheonlineportal.Thistaxwillbecollectedonthenetvalueoftaxablesupplies.

8. 
HowtocomputetaxablevalueofthesuppliesforTCS

Thevalueforthecollectionofthetaxwillbethe‘NetValueOfTaxableSupplies.’
Thisnettaxablevaluewillbecalculatedasunder:

Thetotalvalueoftaxablesuppliesofgoodsand/orservices(otherthannotified
servicesunderGSTlawbyallregisteredpersons)Less:Taxablesuppliesreturned
tothesuppliersthroughthee-commerceoperator=NetvalueofTaxableSupplies

Forexample–M/s.XYZLtd,aregisteredsupplierissupplyinggoodsthroughan

Forexample–M/s.XYZLtd,aregisteredsupplierissupplyinggoodsthroughan
e-commerceoperator.IthasmadesuppliesofRs.55,00,000inthemonthofSep
2018.ThegoodsreturnedwereworthRs.5,00,000toXYZLtd.duringthemonth
ofSep2018.Here,thenetvalueoftaxablesuppliesforTCScollectionwillbe
Rs.50,00,000andTCS@1%,i.eRs.50,000willbedeductedbythee-commerce
operator.Hence,thefinalpaymenttobemadetothesupplierisRs.49,50,000.

Which form can one use to file TCS returns

e-Commerce operators have to fileGSTR-8by 10th of the next month in which the
tax was collected. This return will only be filed once the tax collected has been
deposited to the respective credit of the government. For instance, the due date
for GSTR-8 for Dec 2021 is on 10th Jan 2022.

9. 
e-InvoicingImpactonTCSande-CommerceOperators

Thee-invoicingsystemisalsoavailabletoe-commerceoperators
(ECO)toreportinvoicestotheInvoiceRegistrationPortal(IRP),that
wereraisedbythemonbehalfoftheironlinesuppliers.