In this article, we have covered important details on the deduction of TDS and TCS under GST. Let us go through the process of GST registration for e-commerce operators and the forms required by taxpayers who have to deduct/collect TDS/TCS.
Who will collect TCS under GST?
E-commerce aggregators are responsible under the GST law for collecting and depositing tax at the rate of 1% from each transaction. Any dealers/traders selling goods/services online would get the payment after deduction of 1% tax.
All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by aggregators.
Note: Supplier of services, who is not supplying through an e-commerce operator liable to collect tax at source, having a turnover of less than 20 lakhs are exempted from obtaining registration under GST .
Who will deduct TDS under GST?
TDS is to be deducted at the rate of 1% on the payments made to the suppliers of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs. 2,50,000.
The following people/entities need to deduct TDS:
- A department or establishment of the Central or State Government
- Local authorities
- Government agencies
- a. an authority or board or any other body :
i. set up by an Act of parliament or a state legislature or
ii. established by any government
with fifty-one percent or more participation by way of equity or control.
b. The society established by the central government or state government or any local authority
c. Public sector undertakings as notified in the latest notification dated 13th Sep 2018.
- Any person who is required to deduct TDS or collect TCS will electronically submit an application for registration, duly signed or verified through EVC (electronic verification code), using the FORM GST REG-07 on the Common Portal; either directly or from a Facilitation Centre notified by the Commissioner
- The proper officer will grant registration after verification and issue a certificate of registration in FORM GST REG-06 within 3 working days from the date of submission of application
Cancellation of Registration
- If the proper officer enquires or ascertains through a proceeding that a person is no longer liable to deduct TDS or collect TCS, then the officer will cancel the registration. The cancellation shall be communicated to the said person electronically in FORM GST REG-08
- The officer will follow the same procedure for cancellation as for normal taxpayers
Registration for People Supplying Online Information from Outside India
What does online information and database access or retrieval services mean?
Online information and database access or retrieval services [OIDAR] means services whose delivery is mediated through the internet. The supply is essentially automated involving minimal human intervention and impossible without information technology.
On whom will this apply?
These are a few examples of electronic services from the service tax list which will be considered as OIDAR-
- Advertising on internet
- Providing cloud services (Google Drive)
- Provision of e-books, movie, music, software and other intangibles via internet (Hotstar, Amazon Prime Video)
- Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network
- Online gaming (Steam)
- Web-based services providing trade statistics, legal and financial data, matrimonial services, social networking sites etc
- Supplies of goods, where the order and processing is done electronically
- Supplies of physical books, newsletters, newspapers or journals
- Services of lawyers and financial consultants who advise clients through email
- Booking services or tickets to entertainment events, hotel accommodation or car hire
- Educational or professional courses, where the content is delivered by a teacher over the internet
- Offline physical repair services of computer equipment
- Repair of software, or of hardware, through the internet, from a remote location
- Advertising services in newspapers, on posters and on television
- Internet backbone services and internet access services (BSNL broadband)
It has also been clarified that using the internet just to communicate or facilitate outcome of service need does not always mean that a business is providing OIDAR services.
Here’s a link to download the government of India prescribed GST registration form.