TDS & TCS provision in GST W.e.f 1 Oct 2018
By: – Sandeep Rawat
Goods and Services Tax – GST
Dated:- 3-10-2018
TDS & TCS provision in GST wef 1 Oct 2018
Deduction, registration, compliance, challenges
The GST law requires TDS to be deducted by certain specified Government bodies/ PSUs, where the total value of supply, under a contract, exceeds ₹ 2,50,000.
After the GST regime gained momentum, the government decided to introduce TDS and TCS provisions. The GST law requires TDS to be deducted by certain specified government bodies/ PSUs, where the total value of supply, under a contract, exceeds ₹ 2,50,000.
The recipient of supply i.e. the TDS Deductor is obligated to deduct 2% (1% CGST + 1% SGST) from the payment made or credited for taxable goods or services or both. The aim to bring this provision is to keep a watch on tax evasion and leakages to the extent possible.
The sudden but delayed implementation of TDS provisions from 1 st October 2018 has p
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ems to indicate TDS is not to be deducted on inter-State supplies (irrespective of the location of supplier/ place of supply/ location of recipient).
Although the understanding in the FAQ seems to be incorrect, the Department is yet to clarify this position or make the relevant changes to the law. Till then, it remains unclear whether TDS is to be deducted on inter-State supplies.
*TDS on inter-unit transactions:*
The transactions between two registrations of a same company (even without any consideration) are taxable under GST. As per the provision under TDS, deduction is to be made on payment made or credited to the supplier.
Different companies follow different practices with respect to the compensation mechanisms between its units. In such cases, TDS provisions may pose significant accounting and legal challenges.
*Contract value or supply value?*
The TDS provision specifies that the tax is to be deducted where the total value of such supply, under a contract, exceeds 2.5 lak
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lar clarifications have not been issued and have been a concern for companies.
*Compulsory registration for deductors:*
Persons who are required to deduct tax are required to obtain registration (whether or not registered separately). The provision does not address the situation where a person is operating through multiple places of business in one State. It remains unanswered whether such a person would require separate registration for each place of business to comply with the compulsory registration provision or a single registration for the entire State would be enough.
*Additional compliance burden:*
In addition to legal issues, the business would be required to prepare themselves for certain compliance requirements. Over and above the existing returns, the person deducting the tax would also be required to file GSTR-7 for furnishing the details of tax deducted.vinay
The Deductor would also be required to furnish to the Deductee (supplier of goods or services) a TDS certifica
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