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30 April 2018
 |
| GST (The
Total Investment & Insurance Solutions) |
India
Inc, in particular ecommerce platforms such as Amazon and Flipkart, may need to
prepare for withholding tax provisions in two months under the goods and
services tax (GST). The Total Investment
& Insurance Solutions
The tax deducted at source (TDS) and tax
collected at source provisions had been put on hold following petitions by
industry that this would increase the compliance burden. The Total Investment & Insurance Solutions
But with the GST regime stabilising, these
provisions may be imposed from July 1, said a senior government official.
The TDS provision mandates that notified
entities have to deduct up to 1% state GST and 1% central GST on intrastate
supplies of over Rs 2.5 lakh.
In the case of interstate supplies of over Rs
2.5 lakh, TDS will be 2% integrated GST. These provisions are aimed at checking
tax evasion as TDS/TCS will leave a trail of transactions. In the case of
ecommerce companies, it means that when they make payments to suppliers for
goods sold on their platforms, they have to collect 1% tax and deposit this
with the government.
“The GST Council decision was to extend
suspension of TDS/ TCS proposal till June 30,” said the official cited above.
On June 26, 2017, days before the July 1 rollout of GST, the government had
deferred implementation of the provisions after industry feedback. The Total Investment & Insurance Solutions
The Odisha state government has already
issued a circular on TDS provisions that says identified deductors need to
register themselves, with the likelihood of these coming into force on July 1.
It asked the state tax authorities to identify deductors within their
respective jurisdictions and facilitate registration. “A nodal officer should
be nominated at the circle level to handle all TDS-related activities,”
according to the circular, which ET has seen.
Other states are expected to follow suit.
Ecommerce firms are likely to lobby the government against the move,
reiterating that TCS provisions will add to their compliance burden and could
squeeze cash flow for small and medium-sized enterprises. Although TDS/ TCS can
be claimed, industry is of the view that it could lead to working capital
issues.
Some tax experts also cautioned against the
timing as the return filing process is expected to undergo a revamp with the
upcoming GST Council meeting this week is likely to approve two new forms. “It
may not be the best time to introduce TDS or TCS while the whole return
processes are being reworked,” said Pratik Jain, indirect tax leader, PwC.
“Also, since the GST system is based on selfpolicing with invoice-matching
mechanism, there may not be a need of TDS or TCS, unless there are specific
cases of tax evasion that have surfaced.”The
Total Investment & Insurance Solutions
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