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Relief for auto sector: No GST on tax collected at source levied on goods


New Delhi, March 9, 2019 : The Finance Ministry on Friday provided  relief for the automobile sector, the government has clarified that no goods and services tax needs to be paid on tax collected at source (TCS) under the Income Tax Act.

The Central Board of Indirect Taxes and Customs (CBIC) had earlier said that GST is payable on the invoice value plus TCS and not just on the value of the goods, implying that consumers had to pay GST on the value of tax collected by an auto dealer.

TCS is applicable on automobiles priced above Rs 10 lakh at the rate of 1% and is levied on the ex-showroom price, which includes the applicable GST. This directive had the sector worried over increase in prices. It also affected the telecom sector, especially the tower segment, which faces GST and TCS levies on the sale of scrap, besides the mineral and coal sectors.

The directive was issued in the form of a corrigendum to the circular issued on December 31, following representations from the industry. “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).

However, the Central Board of Indirect Taxes and Customs (CBIC) issued a circular on Friday clarifying that such income tax collected at source by dealers—over and above the value of the goods sold—and paid to the government on behalf of the consumer is not subject to GST.

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