An employee displays a receipt book showing a store’s Goods and Services Tax identification number in Delhi. (Photographer: Anindito Mukherjee/Bloomberg)

TDS, TCS Provisions Under GST To Come Into Effect From Oct. 1

The government has notified October 1 as the date for implementing the tax deducted at source and tax collected at source provisions under Goods and Services Tax law.

As per the Central GST Act, the notified entities are required to collect TDS at 1 percent on payments to goods or services suppliers in excess of Rs 2.5 lakh. Also, states will levy 1 percent TDS under state laws.

E-commerce companies will now be required to collect up to 1 percent TCS while making any payment to suppliers under the GST. States too can levy up to 1 percent TCS under State GST law.

"The e-commerce companies for TCS and various Government Companies for TDS would need to quickly gear up their ERP systems to comply with these provisions from 1st October,” said Abhishek Jain, Tax Partner at EY. “With audit reports as well being notified, the industry would now really need to buckle up, given the short time frame."

Rajat Mohan, partner at AMRG & Associates, said the government has notified operation of TDS provisions on payments made by government agencies and TCS provisions for specified e-commerce operators effective October 1, 2018.

"These twin provisions are expected to further deepen the penetration of tax authorities in the economy, and it is likely to carve out widespread tax evasion of not only indirect taxes but also direct taxes," Mohan said.

The GST, which subsumed over a dozen local taxes, was rolled out on July 1, 2017. However, to make it simpler for businesses in the initial months of rollout, TDS/TCS provisions of GST laws were kept in abeyance till June 30. Later on, it was deferred till Sept. 30, 2018.