Tax Collection at source (TCS) under GST

Initially TCS was introduced under income tax law. As per Tax Collection at source (TCS) rules, a supplier needs to collect a certain percentage in the form of tax along with the receipt of payment from customer. Subsequently deposit the collected amount with the department within the permitted time limit.

In GST Law, the same concept is implemented through Section 52. The department has specified certain circumstances in which taxpayers are required to collect TCS.

Who is responsible for collecting TCS?

Every Electronic commerce operator (ECO) has to collect TCS at time of payments to vendors. ECO needs to collect only when, if he collects the consideration on behalf of the supplier for such supplies and ECO is not acting as an agent.

At what value and rate TCS needs to be collected?

The Tax should be collected at 0.5% CGST, 0.5% SGST and in case of IGST 1% of the net value of taxable supplies.

What is net value of taxable supplies?

The net value of taxable supplies should be computed in following manner:

Consider the aggregate value of taxable supplies of goods/ services less taxable supplies returned to suppliers.

Is there any threshold limit similar to section 51 (TDS)?

No, there is no threshold limit applicable.

When TCS need to be deposited to government?

The amount of TCS needs to be deposited with government by 10^th of next month and GSTR-8 needs to be filed.

Does ECO need to register in each state, if he supplies to multiple states?

Yes, person who is liable to deduct TCS(Tax collection at source). He needs to register in each state and appoint someone in each state, who will be liable to pay TCS.

Where to disclose the principal place of business, as ECO does not have physical presence?

ECO who does not have a physical presence in a State/UT, needs to mention the name of the State/UT in Part A of the application, in which they want to get registration.

Tax Collector can mention the name of the State/ UT in Part B of the application, in which the principal place of business is located, which may be different from the State/UT mentioned in Part A. Thus, Tax Collector can edit the name of the State/ UT field in Part B, if required.

Preconditions for registration:

The preconditions are:

1. For Registration as Tax Deductor: A taxpayer should have a valid PAN or TAN.

2. For Registration as Tax Collector: A taxpayer should have a valid PAN.

3. The taxpayer must have a valid mobile number.

4. The taxpayer must have valid E-mail ID.

5. Taxpayer must have the prescribed documents and information as required for registration.

6. Taxpayer must have a place of business.

7. Taxpayer must have an authorized signatory with valid details.

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