Government postpones TDS and TCS under GST

• The most important objective of finance ministry right now is to ensure smooth rollout of GST. The government has deferred implementation of Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) provisions.Government postpones TDS and TCS under GST

• Based on the feedback received from trade and industry,the Government has postponedthe provision relatingto TDS (Section 51) and TCS (Section 52) for two categories of deductors of the CGST/State GST Act 2017.

• The above two category of deductors are
  • Government, including local authorities : Section 51 of the CGST law dealswith deductors who may be a department or establishment of the central government or state government; or local authority; or governmental agencies; or such persons or category of persons as may be notified by the government on the recommendations of the GST Councilto deduct tax @1% for any payment made or credited.
  • E-commerce : Section 52 of the CGST law deals with operators who are e-commerce traders and their suppliersto deduct TCS (Tax collected at source) from the payments of the sellers and deposit the same to the government.This is not easy for e-commerce platform to comply considering the size of transactions.

• It has been decided that the provisions of Tax Deduction at Source (Section 51 of the CGST/SGST Act 2017) and Tax Collection at Source (Section 52 of the CGST/SGST Act, 2017) will be brought into force from a date which will be communicated later.

• The notification explained that persons/businesses, who are liable to deduct or collect tax at source, are mandatorily required to take registration but the liability to deduct or collect tax will arise from the date the respective sections are brought in force.

• Small businesses/persons who supply goods or services through electronic commerce operator are liable to collect tax at source. Such suppliers are not required to obtain registration immediately, unless they are so liable under Section 22 or any other category specified under Section 24 of the CGST/SGST Act, 2017.

• Small businesses/persons who sell goods or services through e-commerce platform and their turnover is less than Rs 20 lakhs then they are exempted from registration.

• The GST Network portal had started accepting registration of TDS, TCS deductors and e-commerce operators on 25.06.2017. looking at the huge rush, it is unlikely that all registrations would be done before the July 1 rollout date.

• This step has been taken to provide more time for persons liable to deduct tax at source / E-Commerce Companies and their suppliers to prepare for the historic tax reform.

Compiled by CA Ankita Khetan

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