TDS/TCS under GST and Reverse charge mechanism deferred by 3 months 

By | June 27, 2018
(Last Updated On: June 27, 2018)

GST provisions on TDS/TCS, reverse charge mechanism deferred by 3 months

The revenue department has decided to keep in abeyance GST provisions relating to

  • Reverse charge mechanism on intra state supply of goods and services received from unregistered persons  u/s 9(4) of CGST Act
  • Tax deducted at source (TDS) and tax collected at source (TCS)

for another three months till September 2018-end.

Earlier The GST Council in its meeting on March 10 had suspended the provision for deduction of TDS and collection of TCS, as well as implementation of the reverse charge mechanism (RCM) till June 30. 

A senior revenue official said the GST Implementation Committee (GIC), headed by the Revenue Secretary, has decided to keep in abeyance the TDS/TCS provision and GST by way of RCM by another three months.

“The GIC has decided to postpone by three months the TDS/TCS and RCM provisions. Notification will be issued shortly. The GIC decision has been circulated to the states for issue simultaneous notification, the official told .

Besides, the reverse charge mechanism, under which registered dealers are required to make tax payments in case he procures goods from unregistered businesses, too stands deferred till September 2018-end.

Note

As per the Central GST (CGST) Act, the notified entities are required to collect TDS (Tax Deducted at Source) at 1 per cent on payments to goods or services suppliers in excess of Rs 2.5 lakh.

The law review committee, comprising officers from the Centre and states, had earlier suggested reworking Section 9(3) of Central GST Act by bringing composition scheme dealers in the purview of reverse charge mechanism. 

Notifications on Reverse Charge u/s 9(4) of CGST Act

Reverse charge mechanism on intra state  supply of goods and services received from unregistered persons.

  1. Notification No.8/2017-Central Tax (Rate) Dated  28th June, 2017 CGST exemption from reverse charge upto Rs.5000 per day under section 11 (1) of CGST Act 2017 
  2. Notification No.9/2017-Central Tax (Rate) Dated  28th June, 2017 Exempting supplies to a TDS deductor by a supplier, who is not registered
  3. Notification No.10/2017-Central Tax (Rate) Dated  28th June, 2017 CGST exemption for dealers operating under Margin Scheme
  4. Notification No 38/2017 Central Tax (Rate) Dated 13th October, 2017 exempt payment of tax under section 9(4) of the CGST Act, 2017 till 31.03.2018
  5. Notification No 10/2018  Central Tax (Rate) Dated 23rd March, 2018 Seeks to exempt payment of tax under section 9(4) of the CGST Act, 2017 till 30.06.2018

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