GST PROVISIONS FOR TDS AND TCS

[SHUBHAM SHARMA]

Sir

As the provisions for TDS and TCS has not been enabled by the GSTIN, so, how can they purchase goods / consumes services from persons who had been already migrated from VAT/ Service Tax to GST regime.

So how should they proceed ?

[SHUBHAM SHARMA]

In the above post they meant by persons who were liable to deduct TDS under VAT Law.

[Rajagopalan Ranganathan]

Sir,

TDS is governed by Section 51 and TCS is governed by Section 52 pf CGST Act, 2017. Both the sections are yet to be brought into force. Therefore GSTN has not enabled these provisions.

As per Notification No. 1/2017-Central Tax dated 19.6.2017 Central Government has appointed the 22nd day of June, 2017, as the date on which the provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the said Act shall come into force.

Notification No.9/2017-Central Tax dated 28.7.2017 the Central Government has appointed the 1st day of July, 2017, as the date on which the provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9) of section 42, 43 except the proviso to sub-section (9) of section 43, 44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the said Act, shall come into force.

Notification No. 9/2017-Central Tax (Rate) dated 28.6.2017 exempts intra-State supplies of goods or services or both received by a deductor under section 51 of the said Act, from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the said Act, subject to the condition that the deductor is not liable to be registered otherwise than under sub-clause (vi) of section 24 of the said Act.

[SHUBHAM SHARMA]

Sir

Let take the case of a State Government hospital who previously under the VAT regime purchases goods / consumes services from registered dealers under VAT for self consumption and deduct TDS thereon.

But under GST as the provisons for TDS has not been enabled yet, how should they proceed now?

[Himansu Sekhar]

Section 51 has not been enacted means TDs is not applicable. Hospital will not deduct any TDs

[SHUBHAM SHARMA]

Sir

Can they deduct VAT ?

[Rajagopalan Ranganathan]

Sir,

Section 51 of CGST Act, 2017 stipulates that "Notwithstanding anything to the contrary contained in this Act, the Government may mandate,––

(a) a department or establishment of the Central Government or State Government; or

(b) local authority; or

(c) Governmental agencies; or

(d) such persons or category of persons as may be notified by the Government on the recommendations of the Council,

(hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one per cent. from the payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:

Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.

Explanation.––For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.

If the hospital mentioned by you fall under any of the four categories mentioned above then they have to deduct tax at source, that too after the provision is brought into effect. Till then who ever supply goods or services or both they have to discharge GST as supplier. From 1.7.2017 no State Government can levy and collect VAT.

[SHUBHAM SHARMA]

Sir

Mean to say that till the time the GST provisons has not been enabled , the supplier providing goods and services to the hospital will discharge GST liability on their own treating it a B2C transaction and hospital will make payment to them of the whole invoice amount without deduction of any TDS.

[SHUBHAM SHARMA]

And what are the consequences if the hospital had already deducted VAT of the suppliers and also paid the same to the VAT Department?

[Himansu Sekhar]

The supplier will pay the entire tax.

[Himansu Sekhar]

Take up the matter with the hospital authorities

[Rajagopalan Ranganathan]

Sir,

On or after 1.7.2017 if the hospital collects VAT it is without authority of law. Hence even if it is deposited with the Government the same is refundable to the person concerned.

AI Summary

Tax Deduction at Source under GST was inactive, so suppliers must remit GST and purchasers should not withhold under GST.
The document explains that Tax Deduction at Source and Tax Collection at Source provisions under the CGST Act were not yet brought into force and thus not enabled on the GSTN; until those provisions are commenced, suppliers must discharge GST themselves and purchasers who would otherwise be deductors should not withhold GST. It further states that any VAT collected by a purchaser after GST commencement is without legal authority and refundable to the person concerned.