TDS (Tax deducted at source) is not a new concept under GST. It is also there in Income Tax Act, 1961, but associated provisions governing the same under GST are different. In this write- up, we shall discuss TDS in detail.
Also Read- All about TCS (tax collected at source) under GST
Introduction
In a layman language, the one who deducts tax at source known as ‘Tax deductor’. Now we will discuss TDS related provisions.
Provision related to TDS (Tax deducted at Source)
Before moving further, let’s discuss few terms associated with this:
(1) Deductor– The one who deducts tax at the prescribed rate from the payment made or credited to the supplier of taxable goods or services or both.
(2) Deductee- The one who supplies taxable goods or services or both & from whose payment, TDS is being deducted.
Ques 1 Who are eligible to deduct TDS??
Ans. Following are the persons/category of persons are eligible to deduct tax at source:
(a) a department or establishment of the Central Government 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 Government on the recommendations of the Council.
Ques 2 What shall be the rate of tax to be deducted??
Ans. Following are the prescribed rate of tax:
| 1% | CGST/SGST |
| 2% | IGST |
Ques 3 What shall be the threshold limit, over which tax has to be deducted at the prescribed rate of tax??
Ans. If the total value of supply of taxable goods of services or both exceeds two lakh and fifty thousand rupees, then tax shall be deducted at prescribed rate. Hence the threshold limit is Rs. 2,50,000.
Ques 4 Who shall be paid the deducted tax??
Ans. The amount deducted as tax as tax shall be paid to the Government by the deductor.
Ques 5 What shall be the time period within which the amount of deducted tax has to be deposited to Government??
Ans. The amount deducted as tax shall be paid to the Government by within ten days after the end of the month in which such deduction is made.
Ques 6 What are the consequences of non- compliances under TDS??
Ans. Following are the list of non compliances under GST:
| S. 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; else the amount shall be determined and recovered as per the law |
| 4. | Late filing of TDS returns | Late fee of Rs. 100/- for every day during which such failure continues, subject to a maximum amount of five thousand rupees |
Ques 7 Is there any document which the deductor is required to furnish to the deductee, if yes, then what is the time limit for furnishing the same??
Ans. Yes, a Certificate has to be furnished by the Deductor to the Deductee within five days of crediting the amount so deducted to the Government in the prescribed manner*.
| Contents of the certificate:
Contract value, rate of deduction, amount deducted, amount paid to the Government and other particulars. |
* The details of tax deducted at source furnished by the deductor under sub-section (3) of section 39 in FORM GSTR-7 shall be made available to the deductee in Part C of FORM GSTR-2A electronically through the common portal and the said deductee may include the same in FORM GSTR-2.
Ques 8 What are the consequences if deductor fails to furnish the certificate to the deductee within the prescribed time limit??
Ans. If deductor fails to furnish to the deductee the certificate, after deducting the tax at source within prescribed time limit, the deductor shall pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum amount of five thousand rupees.
Ques 9 Can deductee claim the credit for the tax deducted at source??
Ans. The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of section 39, in the prescribed manner.
| Section 39(3) Furnishing of returns
Every registered person required to deduct tax at source under the provisions of section 51 shall furnish, in such form and manner as may be prescribed, a return, electronically, for the month in which such deductions have been made within ten days after the end of such month. |
Ques 10 How the amount in default shall be determined??
Ans. The determination of the amount in default shall be made in the manner specified in section 73 or section 74 of CGST Act, 2017.
Ques 11 What is the process of registration as Tax deductor??
Ans. Every TDS deductor is required to register under GST irrespective of there threshold limit. Following are the steps of registration:
1. Submission of application– The eligible person/ category of persons shall electronically submit an application, duly signed or verified through electronic verification code, in FORM GST REG-07 for the grant of registration through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
2. Grant of Registration & issuance of certificate of registration- The proper officer may grant registration after due verification and issue a certificate of registration in FORM GST REG-06 within a period of three working days from the date of submission of the application.
3. Cancellation of Registration- If upon an enquiry or pursuant to any other proceeding under the Act, the proper officer is satisfied that a person to whom a certificate of registration in FORM GST REG- 06 has been issued is no longer liable to deduct tax at source under section 51 or collect tax at source under section 52, the said officer may cancel the registration issued under sub- rule (2) and such cancellation shall be communicated to the said person electronically in FORM GST REG-08:
Provided that the proper officer shall follow the procedure as provided in rule 22 for the cancellation of registration.
Ques 12 Can Tax deductor is eligible to opt for Composition Scheme??
Ans. In 21st GST Council meet, it was decided that Tax Deductor shall be permitted to avail of the benefit of the Composition scheme with effect from October 1, 2017.
Ques 13 What is the date for registration under GST??
Ans. From September 18, 2017 Tax Deductor at Source can start there registration.
Ques 14 In there any remedy for excess or erroneous amount deducted and paid??
Ans. Yes, there remedy, Any excess or erroneous amount deducted and paid to the Government account shall be dealt for refund under section 54 of the CGST Act, 2017. However, if the deducted amount is already credited to the electronic cash ledger of the supplier, the same shall not be refunded.
Author’s Note:
The meaning of TDS under GST is same as under Income Tax Act, 1961 only the provisions are different. The main aim for introduction TDS under GST is to prevent tax evasion and also to enable the Government to have a trail of transactions and to monitor and verify the compliances.
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Author: C S Ekta Maheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at csektamaheshwari14@gmail.com
Disclaimer: The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.
Author Bio
Can you please share list of
(d) such persons or category of persons as may be notified by the Government on the recommendations of the Council.
in case import of goods? how to deduct pl clarify the procedure.
VERY GOOD
Hi Ekta,
This is MS Harjai
will discuss with you fro some queries in next mail