Duties & Responsibilities of Tax Deductor under GST Act, 2017

1. What is GST?

• Goods and Services Tax (GST) is one indirect tax for the whole Nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.
• Our Constitution is amended to introduce GST system in India. New Articles 246A, 269A and 279A are inserted. Article 246A empowers both Center and the States to levy tax on supply of goods and services in a State. Article 269A empowers the Center to levy tax on supply of goods and services between two States. GST Council is formed under Article 279A.

Under GST, there are three major taxes- Central GST (CGST), State GST (SGST) and Integrated GST (IGST).

• CGST is levied by Central Government on supply of goods or Services in a State.(Intra-State Supply)
• SGST is levied by State Government on supply of goods or Services in a State. (Intra-State Supply)
• IGST is levied by Central Government on supply of goods or Services between two States. (Inter-State Supply)

2. Who is Tax Deductor under GST?

(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, as tax deductor.

3. TDS under GST

> All the DDOs are familiar with the procedure of deduction of tax at source under the Income Tax Act and State VAT Act. Though the procedure of deduction of tax at source under VAT appears to be similar to the procedure of deduction of tax at source under GST, there are some basic differences between the two.

> Sec.51 of Central GST Act and Assam GST Act or Sec. 20 of Integrated GST Act provides the procedures for deduction of tax at source by a Tax Deductor from the payment made or credited to the supply of taxable goods or services or both, where the total value of supply of goods or services or both, under a contract, exceeds two lakh and fifty thousand rupees.

• Tax shall be deducted under CGST and SGST or under IGST Act.
• Threshold limit for deduction of tax is 2.50 lakh of the contract. Tax deduction is not required, if the total value of supply of goods or services or both, under a contract, is 50 lakh or less than 2,50 lakh.
• Tax is deductable if the payment is made in part whose value is less than 2.5 lakh and total contract value exceeds 2.50 lakh. (Example-Contract Value 2.51 lakh. Supply is made against 3 bill/invoices of 90 thousand, 80 thousand and 81 thousand. Tax shall be deducted from the total value of each bill as the contract value is more than 2.50 lakh).
• The rate of tax for deduction is 1% under SGST and 1% under CGST Act where the supplier is registered in Assam. Total 2% tax on the amount of bill or invoice shall be deducted. (Intra-State Supply)
• The rate of tax for deduction is 2% under IGST Act where the supplier is registered in outside the State of Assam. (Inter-State Supply)
• If CGST and SGST are deducted, deduction of IGST is not required. Similarly, if IGST is deducted, deduction of CGST and SGST is not required. IGST is combination of CGST and SGST. So the tax rate of IGST is always double of CGST or SGST.

4. Value of Supply for Tax Deduction under GST

• To determine the total value of supply for deduction of tax, the taxes under GST shown in the invoice by the supplier shall be excluded. That means, no tax shall be deducted on SGST, CGST or IGST tax amount shown in the bill or invoice.
• All other charges shall be included in the total value of supply for calculating the tax for deduction except taxes charged under GST.

ILLUSTRATION:

♠ Where the supplier is registered in Assam:

Particulars	Rate (In Rs.)	Quantity (in nos)	Value (in Rs.)	Tax (in Rs.)			Total (Rs.)
				CGST (6%)	SGST (6%)	IGST (12%
Computer set	50,000.00	6	3,00,000.00	18,000.00	18,000.00	18,000.00	3,36,0000

Total bill amount for calculation of tax is = Rs. 3,00,000.00

Amount of tax to be deducted at source:

SGST @ of 1% of Rs. 3,00,000.00 = Rs. 3,000.00

CGST @ of 1% of Rs. 3,00,000.00 = Rs. 3,000.00

Total deduction of tax is Rs. 6,000.00. The remaining amount of tax i.e. Rs. 36,000.00 – Rs. 6,000.00 or Rs. 30,000.00 (SGST 15,000.00 + CGST 15,000.00) will be paid by the supplier himself to the Government at the time of filing his return.

♠ Where the supplier is registered outside Assam:

Particular	Rate . (m Rs.)	Quantity (in nos)	Value (in Rs.)	Tax (in Rs.)
				CGST (6%)	SGST (6%)	IGST (12%)
Computer set	50,000.00	6	3,00,000.00	0.00	0.00	36,000.00
Total = Rs. 3, 36,000.00

Total bill amount for calculation of tax = Rs. 3,00,000.00

Amount of tax to be deducted at source:

IGST @ 2% of Rs. 3,00,000.00 = Rs. 6,000.00

Total deduction of tax is rupees Rs. 6,000.00. The remaining amount of tax i.e. Rs.36,000.00 – Rs. 6,000.00 or Rs. 30,000.00 will be paid by the supplier himself to the Government at the time of filing his return.

♠ If the charge of services such transportation, installation etc, is mentioned in the invoice separately, tax on services shall also be deducted as per rate and manner stated above.

ILLUSTRATION:

Particular	Rate (in Rs.)	QtY. (in nos)	Value (in Rs.)	Tax (in Rs.)
				CGST		SGST		IGST
				Rate	Amount	Rate	Amount	Rate	Amount
Computer set	50,000	6	3,00,0 00	6%	18,000	6%	18,000	12%	0.00
Transportation	6,000	6	36,000	5%	1,800	5%	1,800	10%	0.00
Installation	4,000	6	24,000	10%	2,400	10%	2,400	20%	0.00
Total			3,60,000		22,200		22,200		0.00
Grand Total Rs. = 4,04,400.00

Total bill amount for calculation of tax is = Rs 3,60,000.00

Amount of tax to be deducted at source :

SGST @ 1% of 3,60,000.00 = Rs. 3,600.00

CGST @ 1% of 3,00,000.00 = Rs. 3,600.00

Total amount of tax to be deducted = Rs. 7,200.00.

♠ IGST shall be deducted using similar method for determination of total value of supply for calculation of tax.

5. Tax Deduction under GST from the Bill of Works Contractor

Works Contract is termed as composite supply in Sec.8 of GST Acts. A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply’

♠ Works contract consist of two or more supplies such as

(i) goods of different type,

(ii) services of labour, machineries, consultancy and transport etc.

♠ WWorks contract is treated as supply of services as it listed in composite supply {6(a) of Schedule II}.

♠ There shall be no ‘Composition Scheme’ for works contractors under GST.

♠ Works contract as a supply shall have separate tax rate.

♠ Hence, tax shall be deducted from total value of supply taking the value of goods and services together (as done in case of WC-2 contractor under VAT regime)

6. Deduction of Tax in Transitional Stage from VAT to GST

Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the Assam Value Added Tax, 2003 and has also issued an invoice for the same before the appointed day, no deduction of tax at source under section 51 shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day.

Tax shall be deducted under VAT, if

• Supplied under VAT
• Bill submitted or issued invoice before GST
• But payment is made after GST

7. Registration of Tax Deductor at Source under GST

Persons who are required to deduct tax under section 51, whether or not separately registered under this Act shall be registered under this Act. (Sec.24)

• A Tax Deductor shall have a separate registration as Tax Deductor though he is registered for other trading activities.
• A Tax Deductor shall submit an application online in GST Portal.
• The format of online application is GST REG-7.
• Application shall be signed electronically using Digital Signature Certificate (DSC)

8. Essential Documents Required for Registration of Tax Deductor under GST

• A Tax Deduction and Collection Account Number (TAN) issued under Income Tax Act, 1961.
• A Digital Signature Certificate (DSC) for signing the online application electronically.
• Office email id and Office mobile/phone number for electronic verification.
• Proof of address of the Office (electricity bill, Municipality receipt etc.

9. Amendment of Registration of Tax Deductor under GST

If there is any change in the particulars furnished in the application of registration (FORM GST REG­07) :

• DDOs need to submit an online application in FORM GST REG-14 along with supporting documents for amendment of registration. (e.g., change in name & Personal information of DDO such as PAN, address, Mobile number etc.

10. Cancellation of Registration of Tax Deductor under GST

If the Tax Deductor is no longer liable to deduct tax at source u/s 51, the registration shall be cancelled in FORM GST REG -08.

11. Online submission of Returns by Tax Deductor under GST

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. (Sec.39)

• TDS return shall be submitted online in GST Portal.
• The format of online TDS return is GSTR-7.
• The last date of filing of online TDS return is 10th of succeeding month.

ILLUSTRATION: Online TDS return for the month of July, 2017 shall be filed in GST Portal on or before 10^th of August, 2017.

• The particulars of TDS return, filed online, shall be made available to each supplier on GST Portal after 10^th of the month so that the supplier can match the details for filing his return.
• The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor

Last Date to file Income Tax Return

12. Issue of TDS Certificate under GST

• The Certificate of Tax Deduction shall be made available electronically to the deductee in GST The particulars of the Certificate shall be auto populated on basis of TDS return already filed.
• The format of TDS Certificate is GSTR-7A.
• DSC/E-Signature is required for online submission of returns etc.

13. Mode of TDS payment

♠ Payment of TDS can be made in following modes by generating an online challan:

1	Internet Banking through authorized Banks
2	Credit Card or Debit Card through authorized Banks
3	NEFT or RTGS from any Bank
4	Over the Counter(OTC) through authorized Banks by cash, cheque or Demand Draft
5	Any other mode of payment for DDOs of Govt. Deptt as may be notified.

♠ Every payment made by the TDS Deductor shall be credited to electronic cash ledger of the Tax He shall utilize the amount available in his electronic cash ledger to discharge his tax liability of the return.

14. Interest, Fees, Penalties, Refund etc.

• The amount deducted as tax shall be paid to the Government by the deductor within ten days after the end of the month in which such deduction is made.
• If any deductor fails to pay to the Government the amount deducted as tax, he shall pay interest at the rate of 18% in addition to the deducted amount of tax.
• The deductor shall furnish to the deductee a certificate of tax deduction mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the Government and other particulars through GST Portal.
• If any deductor fails to furnish the TDS certificate, after deducting the tax at source, within five days of crediting the amount to the Government, 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 five day period until the failure is rectified, subject to maximum amount of five thousand rupees.
• The determination of the amount shall be made in the manner specified in section 73 or section
  74 if found default in deduction of tax or fails to deposit the deducted tax to the Government.
• The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54:
• No refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee.
• If a Tax Deductor at Source,

(a) fails to deduct the tax or

(b) deducts less than the amount required to be deducted or

(c) where he fails to pay to the Government the amount deducted as tax;

he shall be liable to pay a penalty of

(i) ten thousand rupees or

(ii) an amount equivalent to the tax evaded or

(iii) the tax not deducted whichever is higher.

15. Differences Between GST and VAT in Respect of Deduction of Tax at Source

VAT	GST
The word ‘supply’ in common parlance is used in the office of DDOs to mean the supply of goods to a Government Department or organization.	“Supply”is a key word in GST. It includes sale, execution of work contract, stock transfer etc.
While using the word ‘contract’ we may generally mean works contract.	In GST the word “contract”used for a wider meaning. It covers agreement for supply.
TAN under VAT is required to deduct tax.	Online Registration as Tax Deductor is required to deduct tax.
A manual annual return is to be submitted in Form no 35 under VAT	A monthly online return in Form GSTR-7 shall be submitted in GST.
Payment of the deducted tax is to be deposited within ten days of succeeding month in a manual challan.	Payment of the deducted tax shall be deposited within ten days of succeeding month in online mode.
There is a ‘composition scheme’ for works contractor under VAT.	There will be no [composition scheme for works contractor under GST. WC-2 is not required under GST.
On works contract, tax is deducted @ 5% calculated on total value of the bill for WC-2 contractors and 15% on goods in other cases subject to production of less deduction certificate.	Tax shall be deducted at the rate of 1% under CGST and 1% under SGST or 2% under IGST which shall be calculated on the total value of supply. (taking both goods and services together as done in case of WC-2 contractor under VAT)
Tax deduction is not required from the bill of the supplier who is registered outside Assam	IGST shall be deducted from the bill of the supplier who is registered outside Assam
The monetary threshold limit under VAT for deduction of tax is Rs, 5000.00.	No deduction is required if the total value of supply under a contract is 2.5 or less.
TDS certificate is issued manually along with the copies of challans of deposited tax.	TDS certificate shall be issued online in Form GSTR-7A within 5 days of payment of deducted tax. The certificate will be auto populated in GST portal as per details furnished in the return.