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Income tax TCS on sale on Scrap under GST

S PARAMESH (MANAGER - ACCOUNTS and ADMINISTRATION) (33 Points)

15 July 2017

Kindly clarify whether Income Tax TCS on sale of Scrap should be included in the Value of Supply and GST has to be charged on Income Tax TCS (or) TCS has to be charged on value of goods including GST? This question arises when the Section 15(2) of GST ACt on Value of Supply read "2) The value of supply shall include–––(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;". Requesting Experts clarification.

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14 Replies

NITIN KOTAK (SERVICE) (1465 Points)
Replied 15 July 2017

tax on tax it is quite wrong . you charge GST first on basic value than add TCS amount @ prescribed rate on basic value .

RAMESH D MODI (Proprietor) (4864 Points)
Replied 15 July 2017

tcs should be charged on whole amount including gst

NITIN KOTAK (SERVICE) (1465 Points)
Replied 15 July 2017

Whether 1% TCS to be collected on the amount of Vat and Excise Duty Charged.
Opinion
The word sale consideration is not defined under Income Tax Law but as per Section 145A,
“…….the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation
………..”
Hence TCS to be charged on full amount of sale consideration. Taxes, Duties, Cess or fee can not be segregated. The word “Sale Consideration” can not be equated with “Gross Turnover”

1 Like

NITIN KOTAK (SERVICE) (1465 Points)
Replied 15 July 2017

Rameshji you are right. TCS collected on full considration

1 Like

mehul patel (article) (213 Points)
Replied 15 July 2017

it means TCS 1% collect on basic+GST while tds deduct on basic value

S PARAMESH (MANAGER - ACCOUNTS and ADMINISTRATION) (33 Points)
Replied 17 July 2017

tThanks for the replies. I agree that as per Income Tax, TCS has to be charged on total value of sale including taxes but as per GST, the Value of Supply for GST is defined as "2) The value of supply shall include–––(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;" . When the GST act says that the value of supply shall include any taxes levied under any other laws apart from GST laws, whether GST has to be charged on TCS.

Read more at: /forum/income-tax-tcs-on-sale-on-scrap-under-gst-407928.asp

M.S.SHARMA (CONSULTANT) (34 Points)
Replied 01 January 2018

Any conclusion from the above discussion. I would like to add one more thing that in Tally ERP, they excluded GST in calculation of TCS.

1 Like

Muhammad Arshad Ashrafi (Accountant) (189 Points)
Replied 02 February 2018

Our suppliers TCS charge on invoice Where it's declare or entry in gstr2 and gstr3b which table

Mohan Bagalkot (Tax Consultant) (233 Points)
Replied 12 November 2018

Same Question here. TCS collected by supplier in Invoice on 1% on Net Taxable Value not on GST. Where to declare in GSTR3B.

vinod (CA Job) (2 Points)
Replied 18 December 2018

JOURNAL ENTRY FOR PURCHASE OF SCRAP WITH GST AND TCS?

S PARAMESH (MANAGER - ACCOUNTS and ADMINISTRATION) (33 Points)
Replied 04 January 2019

Dear Members, CBITC has issued a Circular No: 76/50/2018-GST dated 31st December 2018 clarifying the correct valuation methodology for ascertainment of GST on Tax Collected at Source (TCS) under the provisions of Income Tax Act, 1961.

The Circular read as follows:

1. Section 15(2) of CGST Act specifies that the value of supply shall include “any taxes, duties cesses, fees and charges levied under any law for the time being in force other than this Act, the SGST Act, the UTGST Act and the GST (Compensation to States) Act, if charged separately by the supplier.”

2. It is clarified that as per the above provisions, 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.

Now it is clarified by CBITC that the GST is applicable on TCS.

This is going to lead to payment of Interest and revision of returns to many assessees, who frequently dispose off their process waste and scraps not charging the GST on TCS.

KSridhar (Asst Manager - taxation) (22 Points)
Replied 05 January 2019

Now how to calculate TCS and GST ? Please clarify.

Anil H khushalani (Employmrent ) (24 Points)
Replied 12 March 2019

Dear Members,

The Central Board of Indirect Taxes and Customs (‘the Board’) had issued circular no. 76/50/2018-GST, dated December 31, 2018, to clarify that the taxable value for the purposes of GST shall include the Tax Collected at Source (‘TCS’) from the buyer under the provisions of the Income Tax Act, 1961. This clarification created a controversy which was also challenged before Kerala High Court whereby an interim stay has been granted.
In light of representations made by various stakeholders, the Board has issued a corrigendum to circular no. 76/50/2018-GST dated March 7, 2019, to clarify that TCS amount collected as per provisions of Income Tax Act is in the nature of interim levy and does not partake the character of tax. Accordingly, for the purpose of determination of value of supply under GST, TCS amount collected from the buyer would not be included.

Attached File : 148140 20190312172604 corrigendum 76 2018.pdf downloaded: 156 times