Detailed Analysis With Examples on TDS Under GST

Article explains Provisions of TDS under GST, By whom TDS under GST are to be deducted, Date from which Deduction of TDS under GST  to be made, Rate of TDS under GST, Threshold limit for deduction of TDS under GST,  When deduction for TDS under GST is required to be made or not to be made, Cases for deduction and non-deduction of TDS under GST, Date of deposit of TDS under GST,  Issue of TDS certificate under GST, Filing of TDS return under GST,  Late Fees for not issuing the TDS Certificate or Late filing of TDS return under GST, Interest for non-payment of TDS under GST etc.

1. Provisions of TDS under GST:

As per section 51 of CGST Act, 2017 Government is empowered to mandate deduction of TDS under GST by certain categories of deductor.

2. By whom TDS under GST are to be deducted :

As per section 51(1), following persons are required to comply with TDS under GST.

a) Department or establishment of Government

b) Local authority

c) Government agencies

d) Such person as notified by Government

Person as per d) above has been notified: Vide notification 33/2017 – Central Tax dated 15.09.2017, wherein Government appoints 18^th September, 2017 as the date from which the provisions of Section 51 (TDS) would come into force. Accordingly as the per said notification, following person are notified to comply with GST provisions (required to deduct TDS)

Nature of Assessee	Description of Assessee
d(i) An authority or a board	An authority or a board or any other body set up by an Act of Parliament or a State Legislature; or established by any Government, with 51% or more   participation by way of equity or control.
d(ii)Society	A society established by the Central or State Government or  Local Authority
d(iii) public sector undertakings:

Therefore after the issuance of above notification, there are 6 categories of persons from “a) to d (iii)” who are required to deduct TDS.

3. Date from which Deduction of TDS under GST  to be made:

The above notification also provided that the date of deduction of TDS to be notified subsequently.

4. Provisions of TDS under GST suspended till 30.09.2018:

Government has suspended the applicability of TDS till 30.06.2018 [(vide Notification No. 10/2018 –Central Tax (Rate) dated 23^rd Mar 2018)] and further suspended till 30.09.2018 [(vide Notification No 12/2018 –Central Tax ( Rate) dated 29.06.2018] .

5. Rate of TDS under GST:

The TDS has to be deducted at the rate of 1% each for CGST and SCGT from the payment made or credited to the supplier and would be 2% for IGST.

Explained with example: A supplier makes an Intra State supply worth Rs. 10 Lakh and is required to charge 18% GST on it (9% each for CGST & SGST). The recipient while making the above payment of Rs. 10 Lakh to the supplier is required to deduct TDS at the rate of 1% each, which would be Rs. 10,000 for CGST & Rs. 10,000 for SGST (10,00,000*1% = Rs. 10,000 /-)

6. Threshold limit for deduction of TDS under GST :

The TDS under GST has to be deducted if the value of supply under a contract, exceed Rs. 2,50,000. Value for the purpose of deduction of TDS shall be considered, excluding the CGST, SGST, UTGST, IGST & Cess under GST.

Therefore, the TDS is deductible only when a single purchase order / contract, exceeds Rs. 2,50,000/, meaning thereby that no TDS would be attracted if the value under the contract for supply of goods or services or both is up to Rs. 2,50,000. The above provision is explained with an example as under .

Example:

Cases	TDS under GST	TDS Income Tax
Mr. A is awarded a contract say PO (No 1) for supply of goods or services for Rs. 2 Lacs and another contract say PO (No. 2) for Rs. 3 Lakh	For PO (No.1), no TDS under GST is required to be deducted as the value of the contract is less than Rs. 2.5 Lakh. However in respect of PO (No.2), TDS would be deducted on the payment of Rs. 3 lakhs, as the value of the contract exceeds Rs. 2.5 Lakh. In respect of PO (No.2) even if a part payment is made say for Rs. 1 lakh, even then TDS would be deducted.	TDS under Income Tax is governed by various sections like Contract (194C), Professional (194J), Rent (194I) etc. So if the payment made to supplier exceeds the threshold limit specified in the concerned section in that financial year, then  TDS provisions would be attracted.

7. When deduction for TDS under GST is required to be made:

TDS is required to be deducted only in the following 2 cases:-

Intra State Supply	Supplier, Recipient & Place of Supply are in the same state: This would be considered as a case of Intra-state supply CGST & SGST would be levied and TDS would be deducted.
Inter State Supply	Supplier, Recipient & Place of Supply are in different states:  In such cases, IGST would be levied as this is a case of Inter-state supply.

The credit would be available to the supplier in the above 2 cases.

8. When deduction for TDS under GST is not required to be made:

TDS is not required to be deducted in the following situation :-

When supplier as well as place of supply is in the same State and the Recipient is registered in another State.

Say for example: Supplier and Place of Supply are in State A and Recipient is registered in State B

In the above case , the supply would be intra-state supply but in such case, transfer of TDS (Central Tax + State Tax of B) to the cash ledger of the supplier (Central Tax + State Tax of A) would be difficult. Therefore, in this case, TDS would not be deducted.

9. Cases for deduction and non-deduction of TDS under GST explained with examples.  

Sl. No.	Location of Supplier	Place of Supply	State of registration of recipient	Type of Supply	TDS under GST	Type of GST
1.	Delhi	Delhi	Delhi	Intra State	Yes	CGST+SGST
2.	Delhi	Haryana	Haryana	Inter State	Yes	IGST
3.#	Delhi	Haryana	Karnataka	Inter State	Yes	IGST
4.#	Delhi	Delhi	Haryana	Intra State	No	Not Applicable

# These cases are similar to “Bill To and Ship To model” having different location.

10. TDS under GST to be deducted on payment or credit to supplier:

Liability to deduct TDS arises when the payment is made to the supplier or credited to the account of supplier. The provision does not specify that the TDS to be deducted earlier of the payment made or credited to the account of supplier. However it appears that the TDS to be deducted whenever one of the events takes place first.

11. Date of deposit of TDS under GST:

The TDS deducted shall be paid to the Government within 10 days from the end of the month, in which the deduction is made. For example: The TDS deducted in the month of August 2018, has to be deposited to the appropriate Government by 10^th September 2018.

12. Issue of TDS certificate under GST:

Deductor has to issue the TDS certificate to the deductee (mentioning the contract value, rate of deduction, amount deducted and amount paid to the government etc.) in FORM GSTR-7A within 5 days of crediting the amount to the government. As per the example given in Para 7, certificate to be issued by 15^th September 2018.

13. Filing of TDS return under GST:

Return has to be filed in GSTR-7, on or before the 10th of the following month. Say for example: GSTR-7 for August 2018 is to be filed on or 10^th September 2018. Therefore, the due date for depositing of TDS and filing of return is same i.e. 10^th of the following month.

14. Late Fees for not issuing the TDS Certificate or Late filing of TDS return under GST:

If deductor fails to furnish the certificate, is liable to pay late fee of Rs. 100 per day, subject to a maximum Rs. 5,000. Same penal provision is also for late filing of TDS returns. (Section 73 of CGST Act).

15. Claiming of credit by Supplier:

Supplier shall claim the credit based upon the return filed by the deductor in GSTR-7 electronically.

16. Interest for non-payment of TDS under GST:

If the deductor fails to pay to the Government the amount of TDS, is required to pay interest at the rate of 18% for the period for which the tax remains unpaid.

17. Registration requirement by the deductor for TDS under GST:

The person requiring deduction of TDS has to get separate registration by filing Form GST REG-07 electronically on GST portal.   Person who is liable to deduct TDS has to compulsorily register and there is no threshold limit for this. The registration under GST can be obtained without PAN and by using the existing Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act. Thus it can be said having TAN is mandatory.

18. Credit of TDS to the deductee (Supplier):

There will be an automatic reflection in the electronic ledger of the deductee (supplier) once the deductor files his/her returns. The deductee can claim credit in his electronic cash ledger of this tax deducted and use it for payments of other taxes.

19. Refund of TDS under GST:

If any excess amount is deducted and paid to the government, a refund can be claimed as this is not the tax amount that the government has a right on. However, if the deducted amount is already added to the electronic cash ledger of the supplier, the amount so added cannot be got back as a refund by the deductor. Deductee can claim a refund of tax subject to refund provisions of the act.

20. No TDS deduction on supplies from Unregistered person:

Vide Notification No 9/2017 –Central tax ( Rate ), dated 28.06.2017 and Notification no 9/2017-Union Territory Tax ( Rate ) dated 28.06.2017 , Exemption has been granted for not deducting TDS in case of Intra-State supplies of goods or services or both received by a deductor under section 51 of the said Act, from any supplier, who is not registered, from the whole of the CGST and UTGST/STGST leviable thereon under sub-section (4) of section 9 of the said Act, subject to the condition that the deductor is not liable to be registered otherwise than under sub-clause (vi) of section 24 of the said Act.

21. Conclusion:

Government has suspended the applicability of TDS under GST till 30.09.2018. However, if the same is to be made applicable from 01.10.2018 a separate notification prescribing a date from which TDS is to be deducted, shall be issued r before the effective date.

The author can be reached at: deepakjauhari@powergridindia.com, Mob 9899891065