India Entry & Business Startup Consultings

Kerala HC stays GST provisions on TCS

The Kerala High Court through an interim order has stayed the GST provision which mandates that tax collected at sources (TCS) by the supplier according to provisions of the Income Tax Act — must be included in the value of supply for levying the GST. The court said the provision would remain suspended until it decides the writ petition challenging the same.

The GST provision has hit car dealers particularly hard as they collect 1% TCS from buyers purchasing cars worth over Rs 10 lakh. In such instances, a car dealer acts like a state agent as required by the specific Income Tax Act provision. This collection is one of ways to monitor high-value transaction by the government since the buyer paying TCS can claim the credit of the same in annual IT return filing.

 

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