All About Provision of Tax deducted at source under GST regime

General Provision related to TDS under GST:-

The section 51 of the Act makes provisions with regards to tax deduction at source by certain recipients. These provisions are similar to provision contained in Income-tax Act, 1961 for deduction of TDS and depositing the same to the credit of Government.

Essential Ingredients:-

1. Obtaining of Registration:-

• Make an online Application in Form GST REG-07 along with all Documents.

2. Persons required to make Deduction of Tax:-

A.  A department or an 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

The Notification No. 33/2017-CT,dated 15/09/2017 specify the following entities also requires to deduct TDS  in exercise of power conferred under Clause (d) of Section 51(1).

– An authority or a board or any other body

I. set up by Parliament or a State Legislature or by a government

II. establish by any Government

with 51% or more participation by way of equity or control, to carry out any function

– A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.

– Public sector undertakings.

No Deducion of tax at Source under GST:-

• Provision

– Proviso to section 51(1) provides that No tax shall be deducted if the location of supplier and the place of supply is in a state or union Territory which is different from the state of registration of recipient.

– Therefore, before deduction of tax the specified person will have to determine the state or union territory in which he is registered and place of supply.

• Instances:-

Sr.No	Location of Supplier	Location of Recipient	Place of Supply	TDS Applicability
1	Maharashtra	Maharashtra	Maharashtra	Yes
2	Maharashtra	Gujarat	Maharashtra	No
3	Maharashtra	Gujarat	Gujarat	Yes

 Date of Deduction of Tax under GST:-

• Yet not notified by government.
• Also the applicability of Clause C is yet not notified. Hence, Government Agencies are not liable to for deduction of tax as of now.

Event:-

• The liability to deduct the tax arises when the payment is made to the suppliers or credited to account of suppliers.

Determination of Value of Supply:-

• The cap limit for deduction of TDS is 2,50,000/-.
• The value of Rs. 2,50,000/- doesn’t includes Tax amount.(i.e CGST, SGST, IGST)

Procedure for Tax

• Quantum of Tax:-

A specified person shall deduct the tax @ 1% from the payment made or credited to the supplier.

• Payment:-

The amount deducted by the specified person shall be paid to the credit of the appropriate government within 10 days after end of the month and file GSTR-7.

• Furnishing of Certificate:-

The person deducting the tax after making payment shall furnish a certificate mentioning therein the contact Value, Rate of deduction, amount deducted, amount paid to appropriate government. The certificate shall be in Form GSTR-7A.

Section 51(4) provides that if certificate is not furnished with in 5 days of crediting amount to appropriate government then late fees of Rs. 100/- will be levied on deductor.

Maximum Cap of Late Fees is 5000/-

• Furnishing of Return:-

The deductor is required to furnish the return in form GSTR-7 and details of tax deducted disclosed in table 3 of GSTR -7.

Also following information will be declared by the deductor in GSTR-7.

Sr.No	Description
1	GSTN of the Deductee
2	Value on which TDS is to be Deducted
3	Amount of tax deducted at source

Mechanism of TDS Credit:-

• Section51(5) provides that supplier shall claim the credit in electronic cash ledger of tax deducted by the specified person, provided tax deducted has been reflected in the return of the deductor.
• If the deductor deduct the tax and not deposit the same with the government, the supplier will not get credit of said tax deducted and supplier will have to pay amount amount on gross basis.

Refund of Tax Excees Paid:

• If any excess amount is deducted and paid to the government, a refund can be claimed as per procedure defind in section 54.

Tax Deducted at Source V/S Collection of Tax at Source:-

Sr.No	Description	Provision of TDS	Provision of TCS
1	Person Liable	Specified as Above	Electronic Commerce Operator
2	Rate	1% of Payment made or credited to suppliers of Taxable goods and/or Services	At Maximum of 1% of net value of Taxable supplies
3	Payment of Tax	By 10th of Next month	By 10th of Next month
4	Issuance of Certificate	With in 5 days of Deposition Tax	NA
5	Filing of Return	With in 10 days from the end of month	No return, But Statement as may be prescribed.
6	Credit to Supplier	Amount will be credited in Electronic cash ledger	Amount will be credited in Electronic cash ledger