pri Applicability of TDS under GST: Section 51 of CGST Act, 2017 Applicability of TDS under GST: Section 51 of CGST Act, 2017


From 1st October 2018, TDS has been made applicable under GST. 

What is TDS?

Section 51 r.w. Rule 66: Tax Deductible at Source (TDS) refers to certain percentage that is deducted by the receiver of Goods/services on the amount payable on account of Supply made if Transaction Value as per Section 15 of CGST act 2017 exceeds 2.5 Lakhs. 

Who are eligible to deduct TDS: Sec 51(1)

  • A department or an establishment of the Central Government or State Government; or
  • Local authority; [Section 2(69)] or
  • Governmental agencies; or
  • Such persons or category of persons as may be notified by the Government.

Which other categories of persons are liable to deduct TDS?

  • An authority or board or any other body with 51% or more participation by way of equity or control:

1. Set up by an Act of Parliament or a State Legislature; or

2. Established by any Govt.,

  • Society established by the Central Govt. or State Govt. or a Local Authority under the Society Regulations Act, 1860
  • Public Sector Undertakings

Which form is required to file the TDS Return?

The person deducting tax is required to file a TDS return in form GSTR-7 within 10 days from the end of the month. 

What is the procedure of claiming Refund under GST? 

Where any excess amount is deducted as TDS and paid to the government, a refund can be claimed by the deductee. However, if the deducted amount is already added to the electronic cash ledger of the supplier, the amount so added cannot be claimed as a refund by the deductor. Deductee can claim a refund of tax subject to refund provisions of the act. 

The taxpayer shall file the refund application in Form RFD-01 on GST portal and choose the ground of refund as ‘Refund of excess balance in Electronic Cash Ledger for claiming refund. After filing, refund application shall be assigned to Refund Processing Officer and refund applicant can track the status of refund application. Once the refund application is filed, Application Reference Number (ARN) receipt would be generated and ARN would be sent to the applicant’s registered e-mail address and mobile number.

The application will be processed and refund will be disbursed by the Jurisdictional Authority after scrutiny. An acknowledgement in Form RFD-02 shall be sent out by him.

Within 15 days from the receipt of RFD-02, the GST officer shall check the application and intimate the claimant in Form RFD-03 requesting for a fresh application in case any particulars are missing.

If the proper officer has reasons to believe that there are certain irregularities which may lead to whole/part rejection of the refund application he may disburse refund on a provisional basis to the extent of 90% of the refund claimed, he shall issue Form RFD-04 within 7 days from the date of acknowledgement in Form RFD-02.

The officer-in-charge shall issue a payment advice i.e, the net amount of refund along with interest if (any) in Form RFD-05 and the refund is credited to the taxpayers bank account electronically. However, RFD-05 is also issued when an order is made under RFD-06 and the entire refund is to be credited to Consumer Welfare Fund.

The proper GST officer shall process the refund application within 60 days from the date of submission of the application and he shall intimate the taxpayer in Form RFD-06 regarding the admissible/ inadmissible claim of refund along with sufficient reasons for the same.

In cases where refund claimed is fully adjusted against any demands or the refund is withheld due to certain reasons, the GST officer shall issue Form RFD-07 mentioning reasons for withholding such refund.

If the proper officer upon processing an application rejects the claim, he shall issue a show cause notice in Form RFD-08 stating reasons for such rejection. The taxpayer is provided an opportunity to furnish a reply in Form RFD-09 within 15 days from the service of notice.

Where petitioner’s refund application had not been processed within 15 days, the department loses its right to point out any deficiency in the petitioner’s refund application. Accordingly, the Refund application shall be deemed to be complete in all respects. [In the matter of Jian International v. Commissioner of Delhi Goods & Services Tax, W.P. (C) NO. 4205 OF 2020 July  22, 2020]

A table illustrating the Forms w.r.t filing of refund application is given below:

RFD-01 The taxpayer files application for claiming refund of tax, interest, penalty or fees.
RFD-02 Within 15 days from the date of claiming the refund. The proper officer shall issue an acknowledgement upon scrutiny of the Refund application.
RFD-03 Within 15 days from the date of claiming the refund. The proper officer shall communicate the deficiencies to the applicant.
RFD-04 Within 7 days from the date of generation of Form RFD-02 or RFD-03 The proper officer shall specify the amount of refund to be disbursed on a provisional basis.
RFD-05 The tax officer shall issue payment advice electronically. The bank account details mentioned in the refund application shall be validated by PFMS.
RFD-06 Within 60 days from the date of submission of refund application The tax officer shall process the application and intimate the taxpayer regarding the admissible/ inadmissible claim of refund along with sufficient reasons for the same.
RFD-07 The GST officer shall mention reasons for withholding of provisional/ final refund.
RFD-08 The tax officer shall issue show cause notice stating reasons for rejection of application.
RFD-09 Within 15 days from the date of receipt of RFD-08 The tax payer submits reply to the show cause notice along with supporting documents.

What shall be the consequences of acceptance of a Refund application by proper officer?

Where the amount of Refund is ordered to be sanctioned provisionally by the authority and a sanction order is passed in accordance with the provisions of rule 91(2) of the CGST Rules, 2017 the Central tax authority shall communicate the same to the State tax authority for making payment of the sanctioned refund amount. The aforesaid communication shall primarily be made through e-mail attaching the scanned copies of the sanction order [FORM GST RFD-04 and FORM GST RFD-06], the application for refund in FORM GST RFD-01A and the Acknowledgement Receipt Number (ARN).

Accordingly, the jurisdictional proper officer shall issue FORM GST RFD-05 and send it to the DDO for onward transmission for release of payment. In case of refund claim for the balance amount in the electronic cash ledger, upon filing of FORM GST RFD-01A, the amount of refund claimed shall get debited in the electronic cash ledger.

What shall be the consequences of rejection of a Refund application by proper officer?

 Where any amount claimed as refund is rejected, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. However, a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal.

What is the time limit within which an appeal against an application rejected by the GST officer is required to be filed?

Any person aggrieved by any order or decision passed under GST Act, 2017 has the right to appeal to the Appellate Authority within 90 days of receiving such order or decision.

What is the manner of filing an appeal to the Appellate Authority?

Section 107 r.w.r 108 of the CGST Rules states the appeal shall be filed in Form GST APL-01 along with relevant documents either electronically or otherwise as may be notified by the Commissioner. A provisional acknowledgement shall be issued to the appellant immediately. A certified copy of the impugned order or decision shall be submitted within 7 days from filing the appeal. The Appellate Authority shall issue a final acknowledgement in Form GST APL-02 indicating appeal number.  

What is the manner of filing an appeal to the Appellate Authority

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of Praveen Surana & Associates whatsoever and the content is to be used strictly for educative purposes only.

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July 2021