Summary: Section 51 of the GST Act mandates specified entities to deduct Tax Deducted at Source (TDS) on payments for goods or services under certain conditions. These entities include government departments, PSUs, government agencies, and entities controlled by at least 51% government equity. TDS applies only if the value of a single contract exceeds ₹2.5 lakh, excluding GST. The tax is levied on the taxable value of goods or services, with rates set at 2% for IGST or 1% each for CGST and SGST. TDS is applicable for taxable supplies but not for exempt, nil-rated, or non-taxable supplies. Recipients are responsible for deducting TDS at the time of payment and filing GSTR-7 by the 10th of the following month. Once the supplier accepts the details, the deducted amount is credited to their electronic cash ledger. TDS does not apply if the supplier and place of supply are in the same state, but the recipient is located in a different state, rendering ITC ineligible.
1. TDS under Section 51 of CGST Act, 2017:
If recipient of goods or services covered under below mentioned list then TDS deduction liability will be arise in the hands of recipient:
a. Local authority
b. Department of central or state government
c. Establishment of central or state government
d. Public sector undertakings i.e PSU
e. Government agencies
f. Entity which is under the control of central government or state government or state governments or central & state government or central & state governments
g. Any other notified by government.
Control:- An entity in which minimum 51% paid up equity shares held by government or governments.
Example:- 20% equity shares held by CG, 15% held by Haryana govt. & 20% held by Mumbai govt. in A Ltd.
Answer:- Sec 51 will be applicable because we will check the combined control of central government & all state governments. If combined percentage of all the government fulfills the requirement then TDS liability will be arise on A Ltd.
*** Only Indian government are covered. If shares held by foreign govt. then it will not be considered.
2. List of recipient which is covered under this section:-
- Punjab National bank: PSU
- Sarva Haryana Gramin Bank: Statutory Body
- Punjab And Sind Bank: Any other body notified by committee
- India Post Payments Bank Limited: Statutory Body
- Baroda U.P Bank: Statutory Body/Government agencies
- Karnataka Vikas Grameena Bank: Public Sector Undertaking etc.
These are the recipient which is liable to deduct the TDS if all other conditions are satisfied.
3. Contract value:-
If value of single contract exceeds Rs. 2,50,000/- then TDS liability will be arises.
- We will considered the value of single contract instead of multiple contract.
- Contract value is excluding the GST component.
Example: Total 3 contracts entered between the parties of Rs 1,00,000 each.
Answer:- TDS will not be applicable because value of single contract is not exceeding the specified limit.
4. Value on which TDS will be applicable:-
At the time of selling of goods or services, GST is applicable on taxable value. Hence, TDS will also be levied on the same amount on which GST is levied.
5. Nature of supplies:-
- TDS will be applicable in case of taxable
- TDS will not be applicable in case of exempt
- TDS will not be applicable in case of nil-rated
- TDS will not be applicable in case of non-taxable
6. Rate of TDS:-
- IGST rate is 2%.
- CGST rate is 1% & SGST rate is 1%.
7. Liability of TDS:-
Recipient will deduct the TDS at the time of payment to supplier.
8. Nature of items:-
- Goods
- Services
Contract related to purchase of goods or services both are covered under this section. Recipient will be deduct the TDS irrespective they are dealing in goods or services.
9. Type of tax:-
- If CG & SG is levied on the invoice then CGST TDS & SGST TDS will be levied at the rate of 1% each.
- If IGST is levied on the invoice then IGST TDS will be levied at the rate of 2%.
10. GSTR-7:-
- Recipient will file the GSTR-7 on monthly
- Due date is 10th of the next month.
11. Electronic cash ledger:-
After filing of TDS return, supplier will accept the invoices details. After acceptance, all amount will be credited in cash ledger of supplier in the tax head instead of credit ledger.
12. POS rules:
TDS is not applicable if location of supplier & place of supply are in same state but location of recipient is in different state (In such cases ITC is ineligible & it will be reported in table-4D(2) of GSTR-3B).
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DISCLAIMER:- The views expressed are strictly of the author. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation. Author will not accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.
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