The government has finally issued notification for implementing the provisions of GST law related to TDS (Tax deduction at source) and TCS (Tax Collection at Source) from October 1, 2018. After this move of the Center, e-commerce companies will have to deduct one percent TCS while paying the supplier.
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Companies and institutions notified under the CGST Act shall have to deduct 1% TDS and deposit in the government account, if payment is made for more than 2,50,000 rupees to the suppliers who supply services or goods. Also, states will levy 1 per cent TDS under state laws.
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Under the CGST law, e-commerce companies will now be required to collect up to 1% TCS while making any payment to suppliers under the Goods and Services Tax (GST). States too can levy up to 1% TCS under State GST (SGST) law. In fact, e-commerce companies provide the convenience of purchasing goods directly from buyers through online platforms. In such a case, the provision of tax can be ensured in such transactions, for which this provision has been made.
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Although e-commerce companies had objection to this provision. Therefore, despite the GST being implemented by the government on July 1, 2017, so far the provisions of TCS and TDS have been deferred. After all, it has now been decided to implement these two provisions from October 1, 2018.
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The implementation of TDS and TCS related provisions will ensure the regulation of small taxpayers. This will give them the benefit of input tax credit. Also the revenue of the government will increase. By implementing them, the government has indicated to the unorganized sector to follow the provisions of GST law so that they can be benefited from it.
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