The Government of India levies and collects the Taxes by various methods and means. TDS and TCS are one of the way through which the Central Government collects the Direct Tax. TDS stands for Tax Deducted at Source whereas TCS refers to be Tax Collected at Source. The concept is structured to collect the taxes at the point of transaction, the system is brought into force in order to reduce the chances of evasion of taxes by the assesse. Here, the tax is withheld/ collected from the assesse or tax payer at the point of transaction itself where the income arises on the transaction.
Unlike under Income tax Act, provisions governing TDS & TCS under GST are different. In this blog, we will discuss the concept and applicability of TDS and TCS and the procedure for registration under same.
Following are some of the important provisions in a comparative form:
TDS (Tax Deducted at source):
Tax Deducted at Source, commonly known as TDS. It is a system wherein predefined percentage of amount is deducted from the amount payable while making payment to the supplier of goods or services. However, when both the supplier as well as the place of supply is different from that of the recipient, no tax deduction at source shall be made.
TCS (Tax Collected at source):
TCS is abbreviated form of Tax Collected at Source, where the supplier of Goods or Services itself will be collecting the tax from the buyer or recipient. Under GST, another provision has been added. Unlike under Income Tax Act, only electronic commerce operators are responsible to collect tax and pay the tax collected to the Government. Various e-commerce operators like Amazon, flipkart etc. are loaded with various tax compliances.
Let’s discuss the provisions for both TDS & TCS:
|Responsible for deducting/collecting tax
- A department or establishment of the Central Government or – – – State Government; or local authority; or
- Governmental agencies; or
- Following are the recently notified persons/category persons:
- an authority or a board or any other body, –
- set up by an Act of Parliament or a State Legislature; or
- established by any Government, with fifty-one percent or more participation by way of equity or control, to carry out any function;
- society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860)
- public sector undertakings:
|Every electronic commerce operator (not being an agent), is responsible to collect an amount of tax in respect of taxable supplies of goods or services or both
|Rate of Tax
|The rate of tax shall be:
1% (Intra-State) &
|The rate of Tax shall not exceed 1% of the net value of taxable supplies.
|Payment of Tax
|The amount shall be deducted/collected shall be paid to the Government within the time as prescribed above.
|Due date of payment of Tax Deducted/ Collected
|10th of next month in which tax is deducted/collected.
Irrespective of their turnover, every tax Deductor & Collector have to be compulsorily registered themselves under GST. Following is the process of registration under GST for TDS/TCS:
- The application for Registration is to be made online by filing of Form GST REG-07 with GST Department.
- After the verification of the application filed, the competent authority may issue the Certificate of Registration in Form GST REG-06 within prescribed time period.
- Where the registrant is no more liable to deduct or collect tax, the appropriate officer after due enquiry may cancel the registration after communication with the registrant.
Documents required for filling the Application:
Only Proof of Principal Place of Business is required:
|For Own premises
|Any document in support of the ownership of the premises like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
|For Rented or Leased premises
|A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
|For premises not covered above
|A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents may be uploaded.
|For rented/leased premises where the Rent/lease agreement is not available
|An affidavit to that effect along with any document in support of the possession of the premises like copy of Electricity Bill.
|If the principal place of business is located in an SEZ or the applicant is an SEZ developer
|Necessary documents/certificates issued by Government of India are required to be uploaded.
While filing TDS Return and TCS Return, following information are required to be furnished under FORM GSTR-7/GSTR-8:
- Period of filing Return
- GSTIN, Name of the Deductor/collector- Every taxpayer is allotted with 15 digit Alpha numeric GSTIN (Goods and Services taxpayer identification number), which is auto- populated.
- Details of TDS/TCS:
- GSTIN of deductee/Supplier
- Amount of TDS which is deducted/supplier
- Amount paid to deductee on which tax is deducted/ Details of supplies made which attract TCS
- Changes in details of TDS/TCS related to previous tax period
- Amount of Interest (Payable and Paid)
- Refund claimed for the period
Due dates for filing TDS Returns & TCS Returns:
|Date of Filing
|TDS (FORM GSTR-7)
|10th of succeeding Month
|TCS (FORM GSTR-8)
|10th of succeeding Month
Indeed, GST came up with various tax compliances, with a motive to increase transparency in the entire tax structure.
The main purpose for the introduction of TDS/TCS provisions under GST is to prevent tax evasion, enables the government to have a trail of transactions, to monitor the compliances. , the process of scanning and tracing the transaction by keeping an eye on the taxpayers had become difficult for the Government due to increase in number of transactions as well as taxpayers. In order to make the process simple and easy by taking the information at the point of transaction takes place, a reform such as, TDS & TCS provisions are introduced in the Taxation system. Earlier the TDS/TCS registrations were barred, however from 18th September, 2017; the registrations are open and compulsory to register as in when falling under the given criteria by the Government.