TDS and TCS Provisions under GST surely be imposed from 1st July 2018!

  • The introduction of GST law on 1st July, 2017 also saw deferring of TDS/TCS provision, which were proposed to be implemented from a later date. The GST Council further defers/ suspends TDS/ TCS under Sections 51/ 52 of the CGST Act, 2017 till 30 June 2018. As per CBEC Press Release, the GST Council has recommended on 10th March 2018 to further defer/ suspend the  implementations of the provisions relating to TDS under CGST Act, 2017 (i.e. deduction of tax at source u/s 51 and collection of tax at source u/s 52) till 30 June 2018. These provisions had been put on hold following petitions by industry that this would increase the compliance burden.


  • These provisions would mandates to notified entities for deducting the TDS/TCS upto 1% SGST & 1% CGST on intrastate supplies and incase of interstate supplies 2% IGST. This would be applicable only if the value of supplies are more than Rs. 2, 50,000/-.


  • These provisions are aimed at checking tax evasion on transactions between registered and unregistered dealers. As the unregistered person can claim the credit of TDS/TCS, only if he would get the registration under GST Regime.


  • Since the Odisha state government has already issued a circular on TDS provisions requiring the identified deductors to get register themselves. As per the circular, a nodal officer should be nominated at the circle level to handle all TDS related activities. Accordingly the TDS/TCS provisions are most likely to be effected from 1st July, 2018.


Impact of TDS/TCS on Construction Industries.
  • The Indian government, itself execute out more than 15,000 civil contracts every year throughout the country. These contracts are acquired by big construction companies like NBCC LTD, RITES LTD etc. and then sub-contracted to smaller firms/ companies and then these Smaller firm/companies again further sub-contracted to another smaller firm/companies.


  • ‘A Limited’ got a contract for Construction of Police station by the government for Rs 10 Crores. ‘A Limited’ outsources work to ‘B Limited’ and then ‘B Limited’ further outsources it to a small civil/labor contractor ‘Mr. C’.


  • Earlier, ‘Mr. C’ would not have registered under service tax/VAT but now he would need to register under GST for claiming the ITC credit.


  • The purpose of inserting the TDS clause under GST is to ensure tax compliance from the unorganized construction sector.

Impact of TDS/TCS ON E-COMMERCE Sector
  • A clause has been inserted under GST law for all the e-commerce aggregators. E-commerce aggregators are made responsible under the GST law for deducting and depositing tax at the rate of 1% from each of the transaction under section 52 of the CGST/SGST Act, 2017


  • Any dealers/traders selling goods/services online would get the payment from online aggregators like Flipkart, snapdeal, amazon etc. after deduction of 2% tax. These aggregators would need to deposit the tax deducted by the 10th day of the next month.


  • Hence all the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by Ecommerce operators.


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