Applicability of TDS Under GST
TDS under GST is notified through N.N.50/2018 dated 13/09/18 to be applicable with effect from 01/10/2018.
Liability to deduct of TDS Under GST
Classes of persons notified by the government are liable to
i. Deduct TDS under GST
ii. File GST TDS returns
iii. Issue TDS Certificate
iv. Other compliances as notified by the government
1. Department/Establishment of Central/State Government
2. Local Authority
3. Government Agencies
4. Authority/Board/Body set up by any act of parliament/state legislature
5. Establishment by any government with 51% or more participation by way of equity/control
6. Society established by the central/state/local authority under the Society Registration Act,1860
7. Public Sector Undertakings(Direct shareholding by government of 51% or more)
# Crux is only government undertakings (whether direct/indirect) are liable to comply under GST-TDS provision (Sec. 51)
√ 2% IGST (If Interstate supply)
√ 1% CGST & 1% SGST (If Intrastate supply)
ONLY IF VALUE OF CONTRACT EXCEEDS BY RS. 2,50,000/-
Kindly note down that if contract value exceeds Rs. 2,50,000, TDS is required to be deducted with respect to payment for each invoice even if the value of the stand alone invoice is less than Rs. 2,50,000. TDS is to be deducted on the value (excluding GST). Eg. Value of supply is Rs. 4,00,000 & GST is Rs. 72,000. TDS @ 2% will be deducted on Rs. 4,00,000 i.e Rs. 8000.
Important: Also for checking applicability contract value as mentioned above should be exclusive of CGST/SGST/IGST/UGST. For eg. If contact value is Rs. 2,95,000 including GST of Rs. 45000. No TDS is required to be deducted as contract value excluding GST is equal to Rs. 2,50,000.
√ GST TDS has to be deducted on the value including any retention monies withheld as even though the payment to the vendor is not made immediately, the liability towards the same is credited to the supplier in the books of accounts of the deductor.
√ TDS to be deducted
If payment made to supplier (whether advance or full both covered)
If credited to supplier in the books of accounts
Whichever is earlier.
√ TDS to be deducted on TAXABLE SUPPLIES of goods/services. It should not be deducted if supply is exempt/non taxable.
√ TDS is also applicable where contract is entered before 01/10/2018 but payment & invoice is made after 01/10/2018 for eg. If contact of Rs. 20 lakhs entered on 20/09/2018 and payment of Rs. 5 lakhs made in respect of invoice dated 11/10/2018, TDS is liable to be deducted in this case as payment and invoice is issued after the applicable date i.e 01/10/2018.
√ TDS not to be deducted in instances where the location of the supplier (deductee) AND the place of supply are in a state which is different from the state of GST registration of the recipient (Deductor). For eg. Deductor location is Punjab, deductee location is Mumbai and the
Place of supply is also in Mumbai (CGST+SGST of Maharashtra). In this case NO TDS is required to be deducted.
Liable persons are required to take separate registration under GST irrespective of the fact that you are already registered under Normal GST or not. Form for registration is GST REG-07 and certificate will be granted in Form GST REG-06. Registration will be done online on GST website https://www.gst.gov.in and select registration as Tax Deductor.
Every tax deductor is required to file return in Form GSTR-07 by the 10th of the succeeding month in which such tax deduction is made.
Every tax deductor is also required to issue TDS Certificate to all deductee’s in Form GSTR-7A giving details of GSTIN of supplier, Invoice Details, Value of supply/ TDS Deducted etc. within 5 days of date of remittance of TDS to the government. In case of failure to issue certificates a late fees of Rs. 100 per day have to be paid subject to a maximum of Rs. 5000.
The amount of TDS deducted shall appear as a credit in the cash ledger of the deductee and would be available as cash equivalent at the time of his monthly form GSTR-3B for payment of tax. There is difference of opinion in this case as some persons say that it will go to Credit ledger of the supplier but in my view it should not be part of credit ledger as the supplier will not be able to claim refund in that case as refund is allowed only in 2 cases – zero rated supply or inverted duty structure.
As per study material by NACIN – TDS not required to be deducted in case
√ Where tax is paid on reverse charge by recipient.
√ Where payment is made to an unregistered supplier.
Similar happens in the case of composition dealer where the tax rate is 1% in some cases and TDS deduction rate is 2%, so it appears to be unjustified if we apply the TDS provision in the above 3 cases. Clarity is required at the government end.
(i) Section 24 & Section 51 of the CGST Act, 2017
(ii) Section 20 of the IGST Act, 2017
(iii) Rule 66 of CGST Rules, 2017
(iv) FORM GSTR-7 & FORM GSTR-7A