No GST on TCS (Tax Collected
at Source)
[GST Corrigendum dated 7th
March 2019 to Circular No. 76 dated 31st December 2018]
Subject: Corrigendum to Circular No. 76/50/2018-GST
dated 31st December, 2018 issued vide F.No. CBEC- 20/16/04/2018-GST.
Vide
serial number 5 of Circular No. 76/50/2018-GST dated 31st December, 2018, it
was clarified that the taxable value for the purposes of GST shall include the
Tax Collected at Source (TCS) amount collected under the provisions of the
Income Tax Act, as the value to be paid to the supplier by the recipient is
inclusive of the said TCS.
2.
In the light of the representations received from the stakeholders, the matter
has been re-examined in consultation with the Central Board of Direct Taxes
(CBDT). The CBDT has clarified that Tax collection at source (TCS) is not a tax
on goods but an interim levy on the possible “income” arising from the sale of
goods by the buyer and to be adjusted against the final income- tax liability
of the buyer.
3.
Accordingly, in S. No. 5 of the Circular No. 76/50/2018-GST dated 31st
December, 2018:
For
5.
|
What
is the correct valuation methodology for ascertainment of GST on Tax
collected at source (TCS) under the provisions of the Income Tax Act, 1961? |
1.
Section 15(2) of CGST Act specifies that the value of supply shall include
“any taxes, duties cesses, fees and charges levied under any law for the time
being in force other than this Act, the SGST Act, the UTGST Act and the GST
(Compensation to States) Act, if charged separately by the supplier.” 2.
It is clarified that as per the above provisions, taxable value for the
purposes of GST shall include the TCS amount collected under the provisions
of the Income Tax Act since the value to be paid to the supplier by the buyer
is inclusive of the said TCS. |
Read
5. |
What is the correct valuation methodology for ascertainment of
GST on Tax collected at source (TCS) under the provisions of the Income Tax
Act, 1961? |
1. Section 15(2) of CGST Act specifies that the value of supply
shall include “any taxes, duties cesses, fees and charges levied under any
law for the time being in force other than this Act, the SGST Act, the UTGST
Act and the GST (Compensation to States) Act, if charged separately by the
supplier.” 2. For the purpose of determination of value of supply under
GST, Tax collected at source (TCS) under the provisions of the Income Tax
Act, 1961 would not be includible as it is an interim levy not having the
character of tax. |
2.
It is requested that suitable trade notices may be issued to publicize the
contents of this Circular.
3. Difficulty, if
any, in implementation of this Circular may please be brought to the notice of
the Board.
F.No. 20/16/04/2018 -GST