ITC Eligibility on GST Charged Over TCS – Clarification Needed

[Ramanathan Seshan]

Dear Experts,

Weve procured manufacturing scrap from Company A, and noticed that GST has been charged on the TCS amount as well as per section 15(2) of CGST Act

For example:

• Scrap value: ?100
• TCS: ?1
• Taxable value considered: ?101
• GST @18%: ?18.18

In this case, can we claim ITC on the full GST amount, including the portion calculated on the TCS?

Regards,

S Ram

AI Summary

Can Input Tax Credit Be Claimed on GST Charged Over Tax Collected at Source (TCS)? Section 15(2) Explained The discussion addresses whether input tax credit (ITC) can be claimed on GST charged over tax collected at source (TCS) under the Income Tax Act. One view holds that TCS is not part of the consideration for supply and thus GST charged on TCS is not eligible for ITC, supported by CBIC Circular No. 76/50/2018 stating TCS is an interim levy and not a tax under GST. Another perspective argues that Section 15(2) of the CGST Act requires inclusion of TCS in the taxable value since it is part of the amount payable to the supplier. However, the prevailing interpretation suggests TCS is a statutory tracking mechanism, not a tax levy, and should be excluded from the GST value for ITC purposes. Some replies note that GST should be charged first, then TCS applied on the total, and ITC eligibility depends on the tax actually charged and paid to the government, subject to other legal conditions.