Enumerate the provisions related to TDS and TCS under GST.
Enumerate the provisions related to TDS and TCS under GST.
Ans.
TDS and TCS Under GST
Concept and Applicability of TDS and TCS provisions w.e.f October 1, 2018.
After getting deferred till September 30, 2018, the Central Government vide Notification No. 50/2018-Central Tax dated September 13, 2018 and Notification No. 51/20 18-Central Tax dated September 13, 2018 has appointed the 1st day of October 2018, as the date on which the provisions of Section 51 of the CGST Act, 2017 (i.e., Tax deduction at source) and Section 52 (i.e., Tax collection at source) shall come into force.
Tax Deduction at Source(TDS) Under GST
Tax deduction at source (‘TDS’) is a mechanism in the GST law wherein the recipient of goods or services deducts out some amount for tax out of the amount payable to the supplier. This amount of TDS is determined on the basis 2% percentage of value of supply.
There are four basic questions which can explain the basic application of TDS as provided under the GST law:
1. Who is liable to deduct TDS- The following persons are responsible for deducting tax:
(a) A department or establishment of the Central 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 Central or a State Government on the recommendations of the Council.
2. What is the rate of TDS under GST- The rate of TDS is 2% under GST.
3. Is there any limit for deducting TDS- If the total value of supply under a contract exceeds Rs. 2.5 lakh, then the person/entity would be liable to deduct TDS.
4. Time limit for payment of TDS- The deductor would be liable to make the payment of TDS by the 10th day of the next month.
Example: Department X of the Central Government deducts TDS @ 2% from Y on October 5, 2018, then it is liable to make payment by November 10, 2018. The deductor shall furnish to the deduct a certificate, after deducting tax at source within five days of such deposit.
Tax Collection at Source (TCS) Under GST
[Sec. 52, CGST Act, 2017]
Tax Collection at Source (TCS) is a mechanism in the GST law where in tax to be collected by electronic commerce operator from supplier supplying through operator. In present scenario electronic commerce is growing. According to Section 2(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network. Famous examples of E-commerce business include Amazon, Flipkart, Uber, etc.
Before, GST electronic commerce operators were not in tax net fully. But, as per GST laws electronic commerce operators are made liable to collect GST at source.
