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In this article, we have covered important details on the deduction of TDS and TCS under GST. Let us go through the process of GST registration for e-commerce operators and the forms required by taxpayers who have to deduct/collect TDS/TCS.

Currently Rate of TCS is notified as 1% of net taxable supplies for intra-state supplies. (i.e 0.5% of CGST and 0.5% of SGST ) and Rate of TCS is notified as 1% of net taxable supplies for inter-state supplies. (1% of IGST)

TDS and TCS provisions under GST to be applicable from 1st October 2018. (Previously, these provisions were applicable from 1st July 2018.)

Who will collect TCS under GST?

E-commerce aggregators are responsible under the GST law for collecting and depositing tax at the rate of 1% from each transaction. Any dealers/traders selling goods/services online would get the payment after deduction of 1% tax.

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 aggregators.

Note: Supplier of services, who is not supplying through an e-commerce operator liable to collect tax at source, having a turnover of less than 20 lakhs are exempted from obtaining registration under GST.

Who will deduct TDS under GST?

TDS is to be deducted at the rate of 1% on the payments made to the suppliers of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs.2,50,000/-.

The following people/entities need to deduct TDS:

A department or establishment of the Central or State Government

Local authorities

Government agencies

  1. an authority or board or any other body :
  2. set up by an Act of parliament or a state legislature or
  3. Established by any government, with fifty-one percent or more participation by way of equity or control.
  4. The society established by the central government or state government or any local authority
  5. Public sector undertakings as notified in the latest notification dated 13th Sep 2018.

Registration

Any person who is required to deduct TDS or collect TCS will electronically submit an application for registration, duly signed or verified through EVC (electronic verification code), using the FORM GST REG-07 on the Common Portal; either directly or from a Facilitation Centre notified by the Commissioner

The proper officer will grant registration after verification and issue a certificate of registration in FORM GST REG-06 within 3 working days from the date of submission of application

Cancellation of Registration

If the proper officer enquires or ascertains through a proceeding that a person is no longer liable to deduct TDS or collect TCS, then the officer will cancel the registration. The cancellation shall be communicated to the said person electronically in FORM GST REG-08

The officer will follow the same procedure for cancellation as for normal taxpayers.