Clarification on Non Deduction of TDS on Work Contract under GST

F.12(31)FD/Tax/2018

Dated:15.05.2018

To,

All HoDs (as per list attached)

Subject: Tax Deduction at Source under GST

Please refer to this office letters No. F.12(89)FD/Tax/2017 dated 20.09.2017 and 02.11.2017 wherein it had been directed that all government departments procuring goods and services under a contract exceeding Rs. 2.5 lakhs will be required to deduct tax at source under Section 51 of the GST law. For this purpose every DDO making such a deduction, is required to take a TAN based registration and to file returns as prescribed under the Act.

It had been specifically directed vide above referred letters that the DDOs are at present only required to register themselves on the GSTN portal and that actual deduction at source will commence at a later date. The date of commencement of deduction has not yet been notified, However, during workshops conducted across the State, it has been pointed out by stakeholders that some of the DDOs have already started deducting tax at source especially in case of Works Contracts. In this regard, it is once again directed that presently, all eligible DDOs arc only required to register themselves on the GSTN portal. Tax is not to  be deducted by such DDOs till notification of the commencement date which shall be communicated in due course.

Further, wherever DDOs have already deducted such tax, a suitable mechanism may be devised by the HoDs to refund the same to the suppliers. The HoDs may review such cases on a priority basis and submit an action taken report in this regard within 15 days.