Correct valuation methodology for GST on TCS under Income Tax

Correct valuation methodology for ascertainment of GST on TCS under the provisions of the Income Tax Act, 1961

The CBIC has issued Circular No. 76/50/2018-GST clarifying certain issues related to GST.

The following clarification has been given on the subject:

Question:

What is the correct valuation methodology for ascertainment of GST on Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961?

Answer:

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.