pri TDS under GST Act TDS under GST Act

Section 51 of CGST act provides for deduction of TDS in certain circumstances. As of now only 3 specified and 1 notified recipient is liable to deduct TDS. In this situation, Supply recipient (referred to as “deductor”) is liable to deduct TDS from the payment made or credited to the supplier (referred to as “deductee”) where the total value of such supply under a contract exceeds 2.5 Lakh.

TDS deductor (recipient) has to compulsorily register in GST without any threshold limit. The deductor has special relaxation for registration under GST without obtaining PAN. If he has TAN issued under Income tax act then he can obtain registration on the basis of TAN only. TDS and TCS will applicable from 1st July 2018.

e.g. The deductor (recipient) has 16 Lakh turnover in F.Y 16-17 then need to take registration as regular taxpayer but if deductor need to deduct TDS, than as per section 25(6) deductor (recipient) mandatorily  take registration as tax deductor without any threshold limit.

Deductees for TDS under GST Act

The deductees are suppliers whose total value of supply of taxable goods or/and services under a contract exceeds 2.5 Lakh excluding tax and cess of GST.

Deductors for TDS under GST Act

The deductors are recipient of taxable goods or/and services from deductee. As per section 51, government mandates 4 specified recipients for deduction of TDS and GST act.

Department or establishment of central or state Government {Section 51(1)(a)} Local authority {Section (51)(b)}
Government agencies {Section 51(1)(c)} Notified persons/category of persons {Section 51(1)(d}

Notification 33/2017 CT dated 18 Sep 2017

 Notified persons/category of persons {Section 51(1)(d)}

An authority or board or any other body-

-setup by an act of parliament or a state legislature or

-established by any government,

With 51% or more participation by way of equity or control

Society established by CG or SG or local authority under society registration Act, 1860. PSU (Public Sector Undertaking

However, the above said persons shall be liable to deduct TDS with effect from date to be notified subsequently by the Central Government.

As per CBIC press release, GST council has recommended on 10th March 2018 to further defer the implementation of the provision relating to TDS and TCS till 30th June, 2018.

Rate of TDS under GST

The tax would be deducted @ 2% of the payment made to supplier (the deductee) of the taxable goods or/and services, where the total value of such supply, under a contract, exceeds 2.5 Lakh (excluding Central tax, State tax, Union Territory tax, integrated tax and cess indicated in the invoice).

If individual supplies may be less than 2.5 Lakh, but if total value of supply under a contract is more than 2.5 Lakh, TDS will be deducted.

The deductor have to deduct tax at the rate of 2% from the payment made or credited to the supplier of the taxable goods or/and services.

No TDS applicability under GST in Certain cases

When the location of the supplier and place of supply is different from location of registration of the recipient then there will be no TDS.

For e.g. Divya is working in Indian oil in delhi HQ. she sent to Haryana for training of Haryana Govt employees. Indian oil entered into a contract with Haryana govt for providing hotel accommodation and travel expenses for 3 Lakh for 3 months. So in this case location of supplier and the place of supply (i.e Haryana) is different from the state in which Indian oil is registered (I.e. Delhi), hence TDS will not be deducted.

Deposit of TDS with Government under GST

The amount of tax shall be paid to government by the deductor (Recipient) within 10 days after the end of the month in which such deduction is made.

Issue of TDS certificate and Payment of late fees under GST

The deductor (Recipient) shall furnish a certificate within 5 days of TDS amount remittance to government.

If deductor fails to issue certificate after deducting the TDS, within 5 days amount paid to government than deductor has to pay a late fees of 100/day from the expiry of the 5th day until he furnish the certificate. The late fee would not exceed 5000.

E.g. DMC (Delhi Municipal Corporation) deduct TDS at the rate of 2% of 3 Lakh on 7th September. This TDS amount has to be remitted to Government on or before 10th October. The TDS certificate has to be issued on or before 15th October.

Penal Interest for Non-payment of TDS under GST to Government

If any deductor (recipient) fails to pay to the government the amount of TDS on time, then he shall liable to pay interest at the rate of 18% p.a. in addition of the TDS deducted.

Refund on excess/erroneous deduction of TDS Under GST

If TDS is deducted erroneously or excessive then deductor or deductee can claim refund of that amount. However, if the deducted amount is already credit to the electronic ledger of the supplier, same shall not be refunded.

TDS Return under GST

The deductor is also required to file return in form GSTR-7 within 10 days from the end of the month. If supplier “deductee” is unregistered than mentioned supplier name rather than GSTIN in the return.

The supplier can take credit of this TDS amount as credit in his electronic cash ledger and use the same amount for payment of tax or any other liability.

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Qualification: CA in Practice
Company: TaxTown
Location: New Delhi, New Delhi, IN
Member Since: 04 Apr 2018 | Total Posts: 2

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  1. chemukula suresh says:

    if the supplier does not have GST number. If the supply value is 500000 then GST TDS is applicable. if applicable how to file the returns without GST number of the supplier.

  2. Yarramsetti Sriram says:

    Hii Sir
    I have purchased Woth of Rs,5,000/-
    IGST@ 18% 900
    Total Invoice Value – Rs.5,900/-.
    Now I have to deduct Rs.100/- of TDS ( Rs.5,000*2%) and have to pay remaing Rs.5,800/- to supplier.
    Am i correct..??

  3. Yarramsetti Sriram says:

    Hii Sir
    If i have purchased some material from registered person, He is raised GST Bill with tax.Can i take that tax as a input and can i used that input to paying TDS amount to govt..?

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July 2021