pri TDS under GST- Registration, Rate, Limit, Certificate, Payment due date TDS under GST- Registration, Rate, Limit, Certificate, Payment due date

Article explains concept of TDS under GST, Who is liable to deduct tax at source under GST, Rate of TDS under GST and value limit, Registration of TDS deductors under GST, Due date of deposit of TDS under GST with the government and TDS Return & Certificate under GST.

1. Introduction to TDS under GST:

Goods and services tax provides for Tax to be deducted at source, a concept copied from Indian Income tax law. The concept of TDS is a most powerful tool to capture tax evasion because it leaves an audit trail of the transaction covered under this provision. The responsibility of collection is also shared between department of revenue and recipient of goods and services. TDS/TCS were a part of GST Act, 2017 but these provisions were not operational and deferred time to time. Now these provisions are being operationalized w.e.f 1st October 2018 via notification No 50/2018-C.T both dated 13-9-2018 respectively.

2. Who is liable to deduct tax at source under GST:

Section-51 of the CGST Act, provides the procedure to deduct tax at source. It is provided that Notwithstanding anything to the contrary contained in this Act, the Government may mandate,–

(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,

Via notification no 50/2018-C.T., dated 13-9-2018, the following persons have further been notified by the government to deduct tax at source-

I. An authority or a bond or any other body- a) set up by an act of parliament or a state legislature; or b) established by any government, with fifty-one percentage or more participation by way of equity or control, to carry out any function;

II. Society established by the central government or the state government or a local authority under the Societies registration Act, 1860

III. Public sector undertakings.

3. Rate of TDS under GST and value limit:

It is  mandated that persons mentioned above are required to deducted tax at source at the rate of 1% from the payment made or credited to the suppliers of taxable goods or services or both, where the total value of such supply under a contract, exceed Rs 250000/-

Explanation-51(1) of the Act provides that for the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, Status tax, integrated tax and cess indicated in the invoice.

4. Registration of TDS deductors under GST:

A TDS deductor has to take compulsorily registeration without any threshold limit. The deductor has a privilege of obtaining registration under GST without requiring PAN. HE can obtain registration using his tax deduvtion and collection account number (TAN) issued under the income tax Act, 1961.

5. Due date of deposit of TDS under GST with the government:

The amount of tax deducted at source should be deposited to the government account by the deductor by 10th of the succeeding month. The deductor would be liable to pay interest if the tax deducted is not deposited within the prescribed time limit.

6. TDS Return & Certificate under GST:

Deductor required to file a return in Form GSTR-7 within 10 days from the end of the month. If the suppliers is unregistered, name of the suppliers rather than GSTIN shall be mentioned in the return. The details of tax deducted at sources furnished by the deductor in FORM GSTR-7 shall be made available to each of the suppliers in part C of FORM GSTR-2A. The supplier can take this amount as credit in his electronic cash register and use the same for payment of tax or any other liability.

Further, TDS certificate is required to be issued by deductor in FORM-7A to the deductee (supplier) within 5 days of crediting the amount to the government, if not credited deductor would be liable to pay  a late fee of Rs 100/- per day from the expiry of the 5th day till the certificate is issued but not more than Rs 5000/- .

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Qualification: CA in Job / Business
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Location: Delhi, New Delhi, IN
Member Since: 24 Jan 2019 | Total Posts: 4

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  1. sumit kumar says:

    Dear Madam,

    I am facing problem in filling GSTR 7 for penalty and interest of delay filling of return and payment of tax.
    Is any alternative is there for condonation of the above fine. Please Clear

  2. Devendra Sharda CA says:

    “The supplier can take this amount as credit in his electronic cash register and use the same for payment of tax or any other liability.”……But this TDS amount neither shows in electronic cash ledger nor in electric credit ledger. Then How A Tax payer can take benefit of this TDS amount by lowering his cash payment towards his GST Tax Payment. Explain…

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July 2021