What is GST TDS:- TDS stands for Tax deduction at Source. GST TDS (Tax deduction at Source) is different from TDS under Income Tax. The provisions of GST TDS are applicable w.e.f. 01 Oct 2018 (Notification No. 50/2018 dated 13 Sep 2018 )

If a transaction is covered under both GST and Income Tax Act, separate deductions will be made, separate returns, and separate TDS certificates will be issued under respective Act.

Persons Liable to Deduct GST TDS :- As per Section 51 of CGST Act 2017 following persons are liable to deduct GST TDS from the payment made of taxable Goods & services w.e.f 01 Oct 2018:-

(a) Central or State Government Departments

(b) Local Authorities

(c ) Government Agencies

(d) Entity controlled by Government companies.

(e) An Authority/ Board/ any other body set up by an Act of Parliament / State Legislature with 50% or more participation by way of equity or control to carry out any function.

(f) Society established by Central Government/State Government/Local Authority under the Society Registration Act 1860.

(g) Public Sector Undertakings.

Note

(i) TDS provisions do not apply when transactions take place between persons specified in category (a) to (e) above.( third proviso of Notification No. 50/2018 -CT dated 13.09.2018, inserted on 31.12.2018

(ii) Local Authority includes Panchayat, Municipilaty, Zila Parishad, District Board Regional Council etc.

Deductor & Deductee :- The recipient of goods & services who is liable to deduct Tax at Source (TDS) is a deductor and the Supplier supplying goods & services to above category of person is a deductee.

Tax Deductions

Registration as deductor :-

The deductor is required to register by applying online even if he is already registered in GST Portal as supplier . The registration form requires mobile number, e mail of DDO (Drawing & Distribution Officer ) of the company. OTP is sent on DDO’s mobile and e mail for verification and he is supposed to be personally liable to comply with TDS provisions.

The Government Department not making any taxable supply of goods and/or services but receiving taxable supplies (awarding contract ) for more than Rs 2.50 Lakhs is required to register only as a deductor of tax at source on the basis of TAN/PAN.

Applicability of TDS Provisions :- TDS need to be deducted if total contract is of value exceeding Rs 2.50 lakhs even if an individual invoice is less that Rs 2.50 Lakhs. Further, TDS provisions will apply at the time of payment released. Similarly, TDS is to be deducted when advance payment is made or credited to supplier.

Non Applicability of TDS Provisions :- TDS provisions are not applicable in following cases :-

(a) Supply from One PSU to another PSU ;- Provisions of TDS do not apply when supply of Goods or Services is made by one PSU (Public Sector Undertakings) to another PSU (notfctn-73-central-tax-dated 31 Dec 2018.)

(b) Specific Authorities Under Ministry of Defence : Specific Authorities under Ministry of Defence except specified in Annexure A are exempt from TDS compliance under GST Notification No. 57/2018

(c ) Location of Deductor is different from Place of Supply & the Supplier : Proviso to Section 51 (1) states that NO deduction of tax shall be made if the location of deductor (the Recipient ) is different from place of supply & the supplier. For example – A Mumbai based Public Sector Undertaking (PSU) engages a contractor of Bangalore for renovation of office in Bangalore. In this case TDS provision will not apply as place of supply & the supplier (contractor) is in Karnataka whilst location of the deductor is Maharashtra.

Thus, TDS is not required to be made in respect of interstate supplies where IGST is chargeable.Therefore supplies in the course of Interstate trade, Exports, SEZ where the goods are cleared with payment of tax shall not attract TDS provisions.

(d) Receipt of Exempted/ Non GST Goods or Services :- TDS is not required to be deducted for Goods or Services exempted under notification No. 02/2017 or 12/2017 and Goods on which GST is not leviable such as Petrol, Alcohol for human consumption etc.

(e) Reverse Charges :- TDS is not required to be deducted where the tax is to be paid on reverse charge by the recipient ( deductee).

(f) Payment to Unregistered Supplier : TDS provisions are not applicable on payments to unregistered suppliers.

(g) Activities specified in Schedule III : TDS provisions are not applicable on all the transactions specified in Schedule III of CGST/ SGST Act 2017 irrespective of the value. Schedule III deals with those activities which can neither be treated as goods nor services.

(h) Cess Payments : TDS provisions are not applicable to payments related to Cess (GST Compensation Cess) components.

Rate of GST TDS : TDS is to be deducted @ 2% ( 1% CGST + 1% SGST) of taxable Goods & Services.

Valuation for TDS deduction For the purpose of deduction of TDS, value of supply shall be taken excluding CGST/SGST/UGST for Intra State supply & IGST for Inter State Supply.

TDS Under GST With Example

A better understanding of TDS provisions under GST could be claimed from the example given below :

Selling price of 2 Laptops @ Rs. 10,000/- per Laptop (Taxable Value) Rs. 1,00,000
If the rate of tax (CGST) on Laptop is 18%
CGST @ 9% Rs. 9,000
SGST @ 9 % Rs. 9,000
Total Invoice Value Rs. 1,18,000
How to deduct TDS on GST bill given above ?

  • TDS to be calculated on the base (taxable value) = Rs. 1,00,000/-
  • TDS rate in GST = 1% (CGST) and 1% (SGST)
  • Calculation to be made excluding the tax amount (Rs. 1,18,000 (-) Rs. 18,000)
  • In the given example TDS calculation would work out to be

Rs. 1,00,000 x 1 % = Rs. 1,000 (CGST)

Rs. 1,00,000 x 1%. = Rs. 1,000 (SGST)

Payment of Tax deducted to Government ;- The amount deducted as tax shall be paid to the Government by the deductor within 10 days after the end of the month.( Sec 51(2) of CGST Act 2017)

Mode of payment of tax deducted under TDS : The deductor has to generate a challan in the portal at www.gst.gov.in and deposit the tax so deducted through e payment mode ie Net Banking, NEFT-RTGS etc)

GST Returns to be filied : GSTR 7 is to be filed within 10 days after end of each month. If there is no transaction in a particular month, the deductor is not required to file return for that month.

Late Fee for not filing GSTR 7 ; Late fee payable is Rs 200 per day ( 100 CGST+100 SGST) maximum Rs 10000/-( 5000+5000) ( Sec 47(1) of CGSt Act 2017)

TDS details to deductee ( Supplier of Goods/ Services ) : The details furnished by the deductor shall be made available to electronically to each of the deductee’s on the common portal.( Rule 66(2) of CGST Rules).In case, deductee find the TDS deducted does not pertains to his supply, he can reject the details appearing in GSTR 2A /4A

TDS Certificate TDS certificate in Form GSTR 7A is generated electronically shall available to the deductee on common portal on the basis of return furnished by the deductor.. If any deductor fails to furnish to the deductee the certificate in Form GSTR 7A,within 5 days of crediting the amount to the Government, he shall be liable to pay Rs 200/- per day by way of late fee.

Benefit of TDS to the Deductee ; There will 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.

Refund of TDS under GST

If any excess amount is deducted and paid to the government, a refund can be claimed 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.

Author can be reached at caanitabhadra@gmail.com

Author Bio

Qualification: CA in Job / Business
Company: BHARAT ELECTRONICS LIMITED
Location: MUMBAI, Maharashtra, IN
Member Since: 17 Aug 2017 | Total Posts: 47
I am a Chartered Accountant with 23 years of experience in Accounts , Direct Indirect Tax with expertise in GST related issues View Full Profile

My Published Posts

More Under Goods and Services Tax

2 Comments

  1. MANISH MUNDRA says:

    Respected Mem
    My query is regarding for canteens which are runned by Peramiliatery forces or police etc. Whether these canteens are also required to deduct TDS from whom they purchases goods for resale?

    1. Anita Bhadra says:

      In my view, TDS provisions applicable to the canteen run by police as it falls under Government Authorities.

      However, Paramillatery forces ( Not applicable on Ministry of Defence except post-audit authorities ie PCDA ( Navy)) Notification 57/2018 dated 23 Oct 2018

Leave a Comment

Your email address will not be published. Required fields are marked *