The Central Board of Indirect Taxes (CBIC) has clarified that Goods and Services Taxes ( GST) would not be applicable on Tax Collection at Source ( TCS ) levied on Goods.
In a clarification circular issued by CBIC has said that “In the light of the representations received from the stakeholders, the matter has been re-examined in consultation with the Central Board of Direct Taxes (CBDT). The CBDT has clarified that Tax collection at source (TCS) is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income- tax liability of the buyer”.
The Circular also clarified that “as per the Section 15(2) of CGST Act, taxable value for the purposes of GST shall include the TCS amount collected under the provisions of the Income Tax Act since the value to be paid to the supplier by the buyer is inclusive of the said TCS”.
“For the purpose of determination of the value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax”, the Circular also said.
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