Arjuna (Fictional Character): Krishna, Navratri festival is coming. Dandiya (Garbha) will be played between friends and relatives. Competition is there between two players. Recently TDS was made applicable under GST w.e.f. 1-10-2018. But it is a good old concept under income tax. How dandiaya will be played between these two players i.e, TDS of Income tax and GST, is there any similarities between the two?

Krishna (Fictional Character): Arujna, wa, Navratri is festival of joy and Goddess of knowledge, courage, etc. Let’s playfully discuss differences between TDS under GST and income Tax. In dandiya both players have to synchronize there moves with each other likewise both TDS have the same foundation, but there are few differences in relation to rate, Payment, returns, certificates etc. Taxpayer should play safe, so he do not get hearted between these TDS dandiya.

Arjuna: What are the differences between TDS under GST and TDS under Income Tax?

Krishna: As in dandiya there are different steps, likewise following are some differences between TDS to be deducted under GST and Income Tax.

1. Deductor:

a) GST: i) Department of the Central Government or State Government ,(ii) Local authority, (iii) Governmental agencies(iv) Other Notified persons.

b) Income Tax: Any person making specified payments mentioned under the Income Tax but if payment is made by an individual or HUF whose books are not required to be audited no TDS is to be deducted.

2. Deductee:

a) GST: The supplier of taxable goods or services or both

b) Income Tax : Recipient of payment

3. Taxability arises on :

a) GST: TDS is required to be deducted if the total value of supply under a contract in respect of supply of taxable goods or services or both, exceeds Rs. 2,50,000/-

b) Income Tax : Depends upon nature of Expense for eg.

i) Rs.5,000 for income from interests other than those on securities (194A)

ii) ₹ 30,000 p.a for the technical/professional services (194J) etc

4. Rate of Tax :

a) GST: Rate of such deduction is @ 2% [i.e. 1% each on CGST & SGST/UTGST component] for intra-State supply & @ 2% [as IGST] for inter-State supply

b) Income Tax: Depends upon nature of Expense for eg. 10% on the technical/professional services, @ 1% on Premium paid for any life insurance policy, etc.

5. Registration :

a) GST : Compulsory registration for the deductors of TDS, if already registered under GST, needs to be registered separately as a TDS deductor.

b) Income Tax: When the deduction liability arises, it is necessary to take the Registration.

6. Payment:

a) GST : Generate a challan in the portal at www.gst.gov.in and deposit the tax so deducted through e-payment mode before 10th on next month.

b) Income Tax: Generally 7th day of the next month online payment at tin.nsdl.com

7. Return :

a) GST: The filing the TDS Return in FORM GSTR-7 can be done both through the online mode.

b) Income Tax: The various types of returns are 26Q,24Q,27Q.

8. Credit:

a) GST: The amount deducted would be available in FORM GSTR 2A/4A of the registered deductee and the same would be credited in his electronic cash ledger.

b) Income Tax: The credit can be disclosed in Form 26AS

9. Certificate:

a) GST: The deductor shall furnish to the deductee a system-generated certificate in FORM GSTR 7A.

b) Income Tax: TDS certificates have to be generated from Dept website and issued by a person deducting TDS to the assessee from whose income TDS was deducted while making payment. Form 16, Form 16A, Form 16 B and Form 16 C are all TDS certificates.

10. Interest and late fees :

a) GST: Failure to issue certificate within 5 days of crediting the amount so deducted to the Government the deductor shall pay a late fee of Rs. 100/- per day under CGST Act & SGST/UTGST Act separately , subject to a maximum amount of Rs.5000/- each under CGST Act & SGST/UTGST Act.

b) Income Tax: Late fees needs to be paid of Rs.200 per Day subject to the amount of TDSI interest @1%,1.5% as applicable.

Arjuna: What one should learn from this Dandiya of TDS?

Krishna: In dandiya  there are rules, procedures, discipline, etc. likewise in TDS of GST, everyone should be cautious while entering into transaction attracting TDS. Also one should take care that they do not get jumbled up between TDS under the two different Acts. Care needs to be taken by Govt. contractors. The Dandiya game has just now started in between GST and Income TDS, lets see how it takes shape. TDS credit should be available in time to taxpayer and he should not be harrassed is only the prayer to Goddess.

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3 Comments

  1. PR says:

    Sir if the transaction is eligible to deeduct tds under gst and income tax then
    payment has to be made 2 times i.e. one for GST and other is Income tax.

  2. RM says:

    if the gst rate for government work contract rate is 12% ( cgst-6% sgst-6%), The govt will certify the work bill for value of work done + [email protected]% and recover 2% in running account bill. how balance will be cleared net off gst input on inward supplies.the changes in contracts and legalities related to gst clauses need be amended/changed in agreements.web based control of gst law is serious evil, there are no dearth of chanakyas -experts in artha shastra.
    One nation – one tax means income tax also need to be merged with GST to create more mess in doing business. Run business by law not talent.

    the tds will be recovered by govt employer agency @2%. gstr7A is issued. if the work is sub let wholly how the gst certificate under 7A can be transferred to subcontractor of the main contractor of the govt works contracts.

    Under income tax act, TDS at the whole rate of tds is deducted and remitted, where as the under gst Only a part of rate of gst viz 2% against 5/12/18 related to works contract services is recovered. how the whole complexity is captured under gstn portal, reports, certificates and formats need be guided to public with input and report formats.

    what is the mechanism for balance 10% of gst. How the entries are made for same under gst portal. also the issue gets complex when the main contractor sub-lets the works under contract act on back to back , turn key, piece rate or labour or item rate, lum sum, fixed price, nature of work wise contracts etc executing particularly in the rural/remote areas.

  3. UMESHWAR SHARMA says:

    Well said
    Dandiya between TDS of GST vs TDS of Income Tax.
    Mechanism may be diiferent but concept remains same.
    Base is different for Taxation.
    GST is collected on sales and payable to Govt after adjusting tax already paid on purchases.
    Whereas recipent is taxed whenever payment is made subject of exemption and allowed deduction over and above exemption limit. and net profit on business entity.

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