Concept of TDS & TCS under GST...

Hello Readers,

For making GST Tax regime as transparent and easy mechanism and to bring in unorganized construction sector in to TAX net, Government has introduced new concepts of TDS (Tax Deducted at Source) & TCS (Tax Collected at Source) in In Direct Taxes.

Let us learn in detail:

TAX DEDUCTED AT SOURCE (TDS)
Persons liable to Deduct to Tax:

  1. A department or establishment of the Central or State Government, or
  2. Local authority, or
  3. Governmental agencies, or
  4. Persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council.
Example: A Municipal Corporation entering construction contract with XYZ Contractors 

  • Rate of TDS - 1% 
  • Value of supply should exceed Rs.2,50,000/- per supply.
  • Value of supply shall not include IGST, CGST, SGST or UTGST charged in Invoice.
  • TDS amount deducted shall be deposited by the 10th of next succeeding month.

Other Important notes:

  1. Such deductor needs to get compulsorily registered under section 23. 
  2. Obtaining TAN issued under income tax act is MANDATORY.
  3. They need to remit such TDS collected by the 10th day of the month succeeding the month in which TDS was collected and reported in GSTR 7.
  4. The amount deposited as TDS will be reflected in the electronic cash ledger of the supplier.
  5. They need to issue a certificate of such TDS to the deductee within 5 days of deducting TDS mentioning therein the contract value, rate of deduction, amount deducted, the amount paid to the appropriate Government and such particulars as may be prescribed.
  6. Non-deduction / short deduction / non-payment or short payment of TDS is on offence under the act for which a minimum penalty of Rs 10000/- is prescribed under the act.
Impact of TDS under GST:
  • It helps in Transparency of government construction contracts.
  • It makes mandatory for Unorganized Construction firms to get register under GST, to claim TDS deducted against them.
TAX COLLECTED AT SOURCE (TCS)

Persons liable to Collect Tax:
E Commerce operators required to collect tax.



  • Rate of TCS - up to 1%.
  • Value of supply- It shall not include value of returned goods.
  • TCS amount collected shall be deposited by the 10th of next succeeding month.
  • It is compulsory to get register irrespective of Turnover.
  • A statement containing value of supplies carried through it during the month shall filed with in 10th of next month.
  • Annual Statement also shall be filed by 31st December of next year.
  • TCS collected shall be reported in GSTR - 8 and the automatically reflected in GSTR - 2A of the supplier.
  • If return not furnished in time, penalty may extend to Rs.25,000/-
  • Non- collection / short collection / non-payment or short payment of TCS is on offence under the act for which lower of the following levied as penalty:
                                                       Rs.10,000/- 
                                                               or
                          Amount of Tax not collected/not paid/  short collected


Regards 
Kumara Swamy A





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