GST - TDS under Goods and Services tax (GST) Laws in India

 TDS under GST Laws in India

 CONCEPT OF TDS UNDER INCOME TAX LAWS

We are aware about concept of Tax Deduction at source (TDS) under Income Tax. Tax Deduction at Source (TDS) is a mechanism under which part of money payable to recipient is deducted as (TDS) by payer at the time of making payment/credit of account whichever is earlier. Recipients gets the credit of TDS in its tax account (PAN)

TDS under GST

Now concept of TDS has already been introduced under Goods and Services tax (GST) (under section 51 of the CGST act to be read with CGST rule 66). 

Accordingly, certain notified registered persons will be required to deduct these taxes while making payments to the registered supplier. In other words, TDS under GST shall be deducted and deposited with the Government by the payer and nothing has to be done by the payee in such case i.e., the person issuing invoice has nothing to do and the payer will do the TDS on the basis of invoice issued.

The provisions pertaining to TDS under GST is given under section 51 of the CGST act to be read with CGST rule 66.

WHO IS LIABLE TO DEDUCT TDS under GST?

Following are the categories of person who will be required to do the TDS:

• A department or an establishment of the Central Government, State government; or
• Local authority; or
• Governmental agencies; or
• Such persons or category of persons as may be notified by the Government

the following entities also need to deduct TDS as notified by the Government-

• An authority or a board or any other body which has been set up by Parliament or a State Legislature or by a government, with 51% equity (control) owned by the government.
• A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.
• Public sector undertakings.

One may note that at present, only above categories of person are required to do the TDS under GST.

RATE OF TDS under GST

TDS is required to be deducted at the rate of 2% (1% SGST and 1% CGST or 2% IGST) on payments made to the supplier of taxable goods and/or services,

THRESHOLD LIMIT FOR TDS under GST

Where the total value of supply, under an individual contract, exceeds Rs.2,50,000/-, then provision of TDS under GST shall be applicable.

WHEN TDS under GST NOT APPLY

ü  No deduction of Tax is required when the location of supplier and place of supply is different from the State of the registration of the recipient.

ü  Where the total value of supply, under an individual contract, is less than Rs.2,50,000/-,

HOW WILL THE VALUE OF SUPPLY ON WHICH TDS SHALL BE DEDUCTED BE CONSIDERED?

TDS under GST shall not be deducted on the CGST, SGST or IGST charged in the invoice.

In other words, for the purpose of deduction of TDS under GST, the value of supply is to be taken as the amount excluding the tax indicated on the invoice.

WHEN SHOULD THE TDS under GST BE PAID?

TDS shall be paid within 10 days from the end of the month in which tax is deducted.

WHAT ARE THE PROVISIONS RELATING TO THE ISSUE OF TDS CERTIFICATES UNDER THE GST LAW?

TDS certificate in form GSTR-7A is required to be issued by the person deducting tax under GST to the concerned person within 5 days of depositing the tax to the government.

Moreover, GST portal will automatically make GSTR-7A available to the deductee on the basis of GSTR-7 filed.

WHAT ARE THE CONSEQUENCES OF NON-COMPLIANCES UNDER TDS under GST?

Sl. No.	Event	Consequence
1.	TDS not deducted	Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law
2.	TDS certificate not issued or delayed beyond the prescribed period of five days	late fee of Rs. 100/- per day subject to a maximum of Rs. 5000/
3.	TDS deducted but not paid to the Government or paid later than 10th of the succeeding month	Interest to be paid along with the TDS amount;
4.	Late filing of TDS under GST returns	Late fee of Rs. 100/- for every day during which such failure continues, subject to a maximum amount of five thousand rupees

 

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