Businesses deducting TDS, TCS to get more time to prepare for GST
With GST rollout just 4-days away, the government has deferred implementation of TDS and TCS provisions as well as exempted from registration small businesses selling on e-commerce platform.
E-commerce companies will not be required to collect 1 percent TCS (Tax Collection at Source) while making payment to suppliers under the Goods and Services Tax (GST) which will be rolled out from July 1.
As per the Central GST (CGST) Act, the notified entities are required to collect TDS (Tax Deducted at Source) at 1 percent on payments to suppliers to goods or services in excess of Rs 2.5 lakh. This provision has been kept in abeyance.
Based on the feedback received from trade and industry, the government has decided to postpone provision relating to TDS (Section 51) and TCS (Section 52) of the CGST/State GST Act 2017, with the objective of ensuring smooth rollout of GST, the finance ministry said in a statement.
Small businesses, with turnover less than Rs 20 lakh, will also not be required to register themselves under the GST for selling goods or services through e-commerce portal.
In other words, persons supplying goods or services through electronic commerce operator liable to collect tax at source would not be required to obtain registration immediately.
“This step has been taken to provide more time for persons liable to deduct tax at source/ecommerce companies and their suppliers to prepare for the historic tax reform,” the statement added.
The GST Network portal has started accepting registration of TDS, TCS deductors and e-commerce operators only yesterday. Given the huge rush, it is unlikely that all registrations would be done before the July 1 rollout date.
Biggest indirect tax reform since Independence, GST will subsume host of levies, including excise, service tax, VAT and other local levies. It will create a uniform market for seamless transfer of goods and services.
GST is expected to widen the tax base, check tax evasion and add about 1-2 per cent to GDP.
With PTI inputs