In this Article I am going to discuss the law relating to Tax Deduction at Source (TDS) under GST Act, 2017. The concept of TDS is not new for us as the same was already applied or complied under Income Tax Act, 1961. In this article I will share or discuss the following concepts of TDS under GST Act, 2017:
INTRODUCTION AND NEED OF TDS:
That as stated above the concept of TDS was firstly introduced in Income Tax Act, 1961 so, this is not a new concept and it was also applicable under VAT Act, 2005 and it is carry forward in GST Act, 2017 also. TDS is basically a part of tax it can also be called or termed as Advance tax, deducted and deposited by receiver of goods or services or both. It is deducted by certain/specified person at certain/specified rates as prescribed by the government through notification issued from time to time. The requirement of TDS is to track the income of taxable person or to track the trail of transaction between the specified category of person as notified by the Government from time to time. GST council in its 28th meeting held on 21.07.2018, recommended to introduce or apply TDS under GST from 01.10.2018.
PROVISIONS/RELEVANT SECTIONS RELATING TO TDS UNDER GST Act, 2017:
GST law mandates Tax Deduction at Source (TDS) vide Section 51 of CGST/SGST Act, 2017 which deals with TDS.
RELEVANT NOTIFICATIONS ISSUED UNDER GST Act, 2017 REGARDING TDS:
Notification no. 33/2017 Central Tax, Dated 15.09.2017
Notification no. 50/2018 Central Tax, dated 13.09.2018
Notification no. 57/2018 Central Tax, dated 23.10.2018
Notification no. 61/2018 Central Tax, dated 05.11.2018
Notification no. 73/2018 Central Tax, dated 31.12.2018
REGISTRATION AS TAX DEDUCTOR UNDER GST Act, 2017:
WHO ARE LIABLE TO GET REGISTRATION AS TAX DEDUCTOR AND TO DEDUCT TDS UNDER GST ACT, 2017:
(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,
The Government through Notification no. 50/2018 Central Tax, dated 13.09.2018 notified the following entities and required them to deduct TDS as per GST Act:
(a) an authority or a board or any other body, ‑
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;
(b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
(c) public sector undertakings.
WHO ARE NOT LIABLE TO DEDUCT TDS UNDER GST ACT, 2017:
Tax is not liable to be deducted at source in the following cases-
a) Supplier, place of supply and recipient are in the same state. It would be intra-state supply and TDS (Central plus State tax) shall be deducted. It would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
b) Supplier as well as place of supply are in different states. In such cases, integrated tax would be levied. TDS to be deducted would be TDS (Integrated tax) and it would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
c) Supplier as well as place of supply are in State A and recipient is located in State B. The supply would be intra-State supply and Central tax and State tax would be levied. In such case, transfer of TDS (Central tax + State tax State B) to the cash ledger of the supplier (Central tax + State tax of State A) would be difficult. So in such cases, TDS would not be deducted. Thus, when both the supplier as well as place of supply are different from that of recipient, no tax deduction at source would be made.
RATE OF TDS UNDER GST:
TDS RETURN :
TDS CERTIFICATE:
REFUND OF EXCESS/ERRONEOUS TDS UNDER GST:
DISCLAIMER: This article is based on the relevant provisions and as per the information existing at the time of preparation. In no event I shall be liable for any direct and indirect result from this article. This is only a knowledge sharing initiative.