GST rollout: TDS, TCS provisions deferred for govt, e-commerce companies

Businesses, with turnover less than Rs 20 lakh, will not need to register under GST

With just 5 days left for the rollout of the Goods and Services Tax (GST), the government has deferred the implementation of tax deduced at source (TDS) and tax collection at source (TCS) provisions for for two categories of deductors -- government, including local authorities, and e-commerce companies and their suppliers.

E-commerce companies will not be required to collect one per cent TCS while making payment to suppliers under the GST regime, to be rolled out from July 1.

According to the Central GST (CGST) Act, notified entities are required to collect TDS (Tax Deducted at Source) at one per cent 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 -- those 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/e-commerce 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.