Transaction in electricity & clean energy certificates are exempted from TCS & TDS
The Central Board of Direct Taxes (CBDT) issued new guidelines for the applicability of Tax deducted at Source (TDS) and Tax collected at source (TCS). Under the new guidelines, e-commerce operations which include transactions in electricity and trading of clean energy certificates (REC and ESCerts) are not subjected to TCS or TDS. CBDT states that the updated guidelines are applicable from 1 october, 2020.
It is important to note that under the previous guidelines, TCS of 1% (IGST 1%, or CGST 0.5% + SGST 0.5%) of the invoice value and TDS of @ 2% (IGST 2%, or CGST 1% + SGST 1%) of the invoice value, where the total value of supply per invoice is more than Rs.2.50 Lacs (as applicable) were levied from all sellers of REC & ESCerts.
CBDT also clarified that the TCS is to be collected and paid to the government on all payments received on or after 1 October, 2020 including on the amount of GST and on sales made prior to 1st October.