Pankaj Goel , Advocate

PANKAJ  GOELTax Deduction at Source is not a new concept in Indirect Taxes. The TDS Provision were already prescribed in Existing VAT Laws. The Provision of TDS were held Valid by Allahabad High Court in case of V.K. Singhal Vs. State of U.P. ( 1995) 97 STC 355.

As per Section 37 of new GST Model Law released by “Empowered Committee of state Finance Minister on 14th June 2016, the Provision of TDS are:

(1) Notwithstanding anything contained to the contrary in this Act, the Central or a State Government may mandate, –

(a) a department or establishment of the Central or State Government, or

(b) Local authority, or

(c) Governmental agencies, or

(d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council,

[hereinafter referred to in this section as the deductor], to deduct tax at the rate of one percent from the payment made or credited to the supplier [hereinafter referred to in this section as the deductee] of taxable goods and/or services, notified by the Central or a State Government on the recommendations of the Council, where the total value of such supply, under a contract, exceeds rupees ten lakh.

Explanation. – For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the tax indicated in the invoice. The amount deducted as tax under this section shall be paid to the credit of the appropriate Government by the deductor within ten days after the end of the month in which such deduction is made, in the manner prescribed.

(2) The deductor shall, in the manner prescribed, furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the appropriate Government and such particulars as may be prescribed in this

(3) If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the appropriate Government, the deductor shall be liable to pay, by way of a late fee, a sum of rupees one hundred per day from the day after the expiry of the five day period until the failure is rectified:

Provided that the amount of fee payable under this sub-section shall not exceed rupees five thousand.

(4) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor filed under sub-section (5) of section 27, in the manner

(5) If any deductor fails to pay to the credit of the appropriate Government the amount deducted as tax under sub-section (1), he shall be liable to pay interest in accordance with the provisions of section 36, in addition to the amount of tax

(6) Determination of the amount in default under this section shall be made in the manner specified in section

(7) Refund to the deductor or the deductee, as the case may be, arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 38:

Provided that no refund to deductor shall be granted if the amount deducted has been credited to the electronic cash ledger of the deductee.

The above provisions of TDS are tabulated below:

S.No.PointsProvisions
1Deductor

 

Following are liable to deduct TDS under Sub Section 1 of Section 37
1. a department or establishment of the Central or State Government, or

2. Local authority, or

3. Governmental agencies, or

4. Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council.

2Deductee

 

Deductee is the Supplier of taxable goods and/or services, notified by the Central or a State Government on the recommendations of the Council.
3When to Deduct TDSTotal Value of Supply Exceed Rs 10, 00,000/= (Rs. 10 Lakhs).

The value of supply shall be taken as the basic amount before tax indicated in invoice

4Rate Of TDS1% of payment made or credited to the Supplier of taxable goods and/or services.
5Deposit of TDSUpto 10th of following Month
6Issue of TDS Certificatewithin 5 days of crediting the amount so deducted to appropriate Government
7Penalty for Non Furnishing TDS Certificate in Time

 

Late fee of Rs. 100/= per day from the day after the expiry of the five day period until the failure is rectified.

Maximum Penalty Rs. 5000/=

8Claim Tax credit by Deductee in his electronic cash ledger(1) Amount Tax Deducted and reflected in the return of the deductor filed under sub-section (5) of section 27, in the manner prescribed.
9If any deductor fails to pay to the credit of the appropriate Government the amount deducted as tax(1) Deductor shall be liable to pay interest in addition to the amount of tax deducted.
10Excess or erroneous Deduction(1) Refund to the deductor or the deductee, as the case may be, arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 38:
11No refund to deductorNo refund to deductor shall be granted if the amount deducted has been credited to the electronic cash ledger of the deductee.

(Author Details- Pankaj Goel , Advocate- 356, Sector-37, Faridabad, Haryana-121003, Mobile : 9811793940, E-mail: pankajgoel356@gmail.com)

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