The Goods and Service Tax or the GST will complete one year on July 1st, 2018. In this period, a number of provisions which were part of the original draft for GST were put on hold at the behest of requests from Industry leaders and experts to reduce the burden of Tax compliance.
Also, we must remember, the country was still recovering from the initial jolts of Demonetization. Hence, a full fledge GST imposed on the country amidst the cash crunch would have increased naive grievances… something which no ruling party desires.
So, the GST was rolled out in a phased out manner to keep boiling sentiments at a check and also ensure smooth functioning of the dominant indirect economy sector. However, it seems now the economy has recovered from the initial setback. The e-way bill, underpinned by the now stable and robust GSTN, has been successfully relaunched. E-commerce companies like Flipkart must now prepare for stronger tax compliance. In the light of the existing GST norms, e-commerce platforms must comply with the currently dormant GST provisions: The tax deducted at source (TDS) and tax collected at source (TCS) provisions.
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To reduce the burden of Tax Compliance on e-commerce platforms, TDS and TCS provisions were put on hold. But as per a senior government official, the GST is now intricately merged with India’s Economy. To bring India’s shadow indirect economy within the GST ambit TDS and TCS provisions may be imposed from July 1. As per the provisions…
- 1% state GST and 1% central GST will be levied on intrastate supplies of over Rs 2.5 lakh
- Interstate supplies of over Rs 2.5 lakh will attract 2% integrated GST.
The unorganized or unregulated construction sector, as well as the growing e-commerce, will be most affected by the provisions to go into effect from July 1st, 2018. TDS and TCS will enable Tax Authorities to monitor transactions easily. E-Commerce companies will now collect 1% TCS on any supply made by an individual seller on their platform. The collected proceeds from the TCS has to deposit with the government within 10th of the next month. The individual seller can later claim ITC via the e-Cash Ledger as collected and reflected by the Operator. The ITC shall be credited by the Government upon matching the suppliers claimed amount with the details furnished by the Operator in GSTR-8.
For the time being, there is no official statement from the Finance Ministry about the provisions coming into effect post the first year of GST. However, recent circulars urging identified deductors to register before July 1st, 2018 hint towards the possibility. As per the circular,”A nodal officer should be nominated at the circle level to handle all TDS-related activities”.
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A few issues that could still tilt the scales in the favour of India inc and the e-commerce companies in particular include:
- Working capital Deficit.
- New return filing process slated to come into effect post the 27th meeting of the GST Council.
As per some experts, bringing TDS-TCS provisions into effect under GST in parallel with the introduction of the new tax return process is mistimed.
