Brief discussion on TDS under GST

All you want to know about TDS under GST, Documents required for registration as TDS Deductor, Procedure for Registration, Deduction and Deposit of TDS, Filing of return of TDS, issuing of GST TDS Certificates.

Just like Income Tax TDS, GST TDS has started w.e.f. 1^st October, 2018. Earlier before GST regime there was WCIT system which was applicable on works contract i.e. material and services but GST TDS is applicable on all taxable supplies which can be goods or services or both. This concept is to ensure taxation compliance of the suppliers of Govt, PSUs etc.

TDS under GST is Applicable on following persons:

1. A department of Central/ State Government
2. Local authority;
3. Governmental agencies;
4. Any separate body set up by Central or State Law, with 51% or more equity or control by the government
5. A society established by the Central or any State Government or a Local Authority
6. Public sector undertakings.

All above persons shall have to take a new registration as Tax Deductor. This Registration will be separate from existing GST registration as Tax Payer.

Documents required for registration:

Copy of PAN or TAN if PAN Not available

Address Proof (Electricity Bill, Property Tax receipts etc), Contact No/Mobile No, Email

Authorized Signatory Documents viz. PAN, AADHAR, Mobile No., Email, authorization Letter

Procedure of registration for TDS deduction under GST:

Registration will be done online on GST website. Deductor has to fill the details by selecting category as Deductor. OTP will be received on given email ID and Mobile number. After entering OTPs, registration form is to be completed.

TDS Rate under GST and applicability

TDS rate will be 2% (CGST 1%, SGST 1% or IGST 2%) and it will be deducted from the payment made or credited to the supplier of taxable goods or services or both, if value of such supply, under a contract, exceeds 2,50,000/-. No TDS will be deducted from Exempt Supply. At present there is lack of clarity if all supplies are covered or not but as per experts, all supplies are to be considered where Purchase order is issued or some agreement is entered into and value exceeds 2,50,000/-

TDS will be deducted on Taxable value i.e. amount before GST.

TDS @2% will be deducted on Rs. 5,00,000/-. So TDS amount will be Rs. 10,000/-

Net Payment will be 5,90,000 – 10,000 = Rs. 5,80,000/- (without considering Income Tax TDS)

 Deposit of TDS under GST

TDS will be deposited on or before 10^th of Next month.

Filing of Returns of TDS under GST

TDS returns will be filed in GSTR-7 which will contain details of deductee viz. GSTIN, Name, Amount of Supply, Rate and amount of TDS. Due date is 10^th of Next month. Any correction can be done in GSTR-7 of next month.

Issuing of TDS Certificates under GST to deductees

TDS certificates in Form GSTR-7A shall have to be issued to supplier within 5 days after deposit of TDS. In case of failure to issue certificates a late fees of Rs. 100 per day shall have to be paid subject to maximum of Rs. 5000/-

Deductee can view the TDS deduction details in his GST Cash Ledger and can use it in payment of GST.

 (Author CA Shashi Bhushan, Jalandhar can be reached at [email protected])