TDS and TCS under GST to Fight Tax Evasion


The early day’s chaos and challenges of GST have now got general acceptance across the country. But as GST has gained momentum and developed a trust value in the market, the GST council led by finance minister Mr. Arun Jaitley took another vital decision of introducing the Tax Deducted at Source (TDS) and Tax Collection at Source (TCS Tax) provision from 1st October 2018 onwards which the government believes was a necessary step to curb the unintended use of tax laws.

Scenarios which led to the birth of TDS/ TCS in the GST regime

Let’s look back at the scenarios a few months back, which insisted the government to implement TDS and TCS. By the end of Feb 2018, the tax authorities have found over 61 different cases of evasion of GST involving 315.13 crores and have made a number of arrest for suspected GST evasion. However, there was some relief when the tax collection for April 2018 crossed ₹1 lakh crore but the government still felt tax evasion as a major threat for both the Centre and the State. Since then, they have been working to introduce various measures to detect and curb revenue leakage. The Government has always tried to be transparent and disciplined with the onset of GST.

The TDS/ TCS Notification

As per the government notification, the recipient of the supply i.e. the deductor will now be responsible to deduct 2% (1% CGST +1% SGST) from the payment made or credited for taxable goods or services or both in excess of Rs 2.5 lakh. The E-commerce companies have also come under the same umbrella as they are required to collect up to 1% TCS while making payments to the suppliers under GST. With the implementation of TDS and TCS from October 1st, every e-commerce company & PSUs/ Government Companies would need to quickly gear up their GST software systems for TCS & TDS respectively, especially when they have been given a very short span time frame.


GST which was rolled on July 1, 2017, has completed its journey of more than one year in India and from its beginning has always kept TDS/ TCS provision of GST suspended but hope it gets discussed and clarified during the 30th GST Council Meeting scheduled on 28.09.2018 and gets a final word on the same.

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