Introduction: –
Tax Deducted at Source (TDS) is one of the ways to collect tax based on certain percentages on the amount payable by the receiver on goods/services. The collected tax is a revenue for the government. The provision pertaining to TDS under GST is given under Section 51 of the CGST Act to be read with CGST Rule 66.
October 01, 2018 is the effective date for applicability of TDS provisions.
Person Liable to deduct TDS: –
As per Notification NO. 33/2017 – Central Tax dated 15.09.2017 read with Notification No. 50/2018 – C.T. dated 13.09.2018, Section 51 (provisions related to TDS) come into force with effect from 01.10.2018 and notifies the following persons under section 51(1)(d) liable to deduct TDS-
1. An authority or a board or any other body
2. which has been set up by Parliament or a State Legislature
3. or by a government,
with 51% equity (control) owned by the government.
1. A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.
2. Local Authority
3. Government Agencies
4. A Department or establishment of the central or state Government – In this regard, Notification No. 57/2018- C.T dated 23-10-2018 enlist the authorities of Ministry of Defence to which TDS is applicable
5. Public sector undertakings.
TDS provisions do not apply to the following: –
As per Notification No. 50/2018-CT dated 13.09.2018 (as amended) TDS provision shall not apply :
- Authorities under the Ministry of Defence, other than the authorities specified in Annexure-A and their offices (Notification No. 57/2018- C.T dated 23-10-2018) w.e.f. 01.10.2018 (see annexure 1)
- When supply is between PSU (Public sector undertaking) to another PSU (Notification No 61/2018 C.T. dated ) w.e.f 01.10.2018 (see annexure 2)
- When supply is between persons specified in clause (a) to (d) of section 51 (1) of CGST Act, 2017 (as specified above) (Notification No 73/2018 C.T dated 31.12.2018) w.e.f 31.12.2018 (see annexure 3)
When Tax shall be deducted at source: –
TDS is to be deducted at the rate of 2% on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs.2,50,000.
Please note no tax shall be deducted on Exempted and Nil rated supply of goods and services.
When there is a common contract for taxable supply as well as exempted supply. But value of taxable supplies is not exceeding Rs.2,50,000 under that contract.
Example :-
XYZ Ltd have supplied printed material valued at Rs. 2,10,000 along with books valued at Rs. 1,00,000 to department of Govt. and a tax invoice has been raised for Rs 3,10,000 plus applicable GST.
In this case, tax shall not be deducted as taxable value of goods is less than the threshold limit of Rs. 2,50,000. Books are exempted vide Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017.
When Tax shall not be deducted at source: –
1. No deduction will be made if location of supplier and the place of supply are in a state which is different from the state of registration of recipient.
Example :-
Where the location of the supplier and the place of supply is in Chandigarh and the recipient is registered in Delhi. No tax shall be deducted.
2. All Activities or transactions specified in Schedule III of the CGST/SGST acts 2017, irrespective of the Value.
3. Payment relates to the tax Invoice Issued before 01.10.2018.
4. When tax is to be paid on reverse charge by the recipient.
5. When Payment made to an unregistered supplier
Rate of TDS:-
The prescribed rate of TDS is 1% CGST plus 1% SGST or 2% IGST from the payment made or credited to the supplier of taxable goods and / or services.
Valuation of Supply:-
For the purpose of tax, the value of supply shall exclude the taxes leviable under the GST namely CGST, SGST, UTGST, IGST and Cess.
Tax will be deductible on only taxable value of the supply. No tax shall be deducted on taxes shown in the invoice.
How Deductee can claim credit of TDS: –
Deductee will login to GST Portal and accept the TDS reflecting there. After acceptance, TDS will automatically reflect in his Electronic Cash Ledger. Deductee can accept TDS by following the below steps :-
1. Access the www.gst.gov.in URL.
2. Login to the GST Portal with valid credentials.
3. Click the Services > Returns > TDS and TCS credit received command.
4. The TDS and TCS credit received page is displayed.
5. Click on “Prepare Online”.
6. Click on “TDS Credit Received” in case of TDS Claim or “TCS Credit Received” in case of TCS Claim.
7. Here you can view the credit available.
8. Message will be shown as “Success: Record Accepted Successfully.”
Composition dealer can also take credit and adjust this amount against his output tax liability, as this amount is not an input tax credit.
Time limit for Issuance of TDS Certificate by Deductor:-
TDS Certificate in form GSTR – 7A will be issued within 5 days of depositing the TDS to the government.
Deductee can download the TDS certificate by following the below steps :-
access the www.gst.gov.in URL. Login to the GST Portal with valid credentials. Navigate to Services > User Services > View/Download Certificates option.
Refund arising out of Excess or erroneous deduction:-
Yes refund may be claimed either by the deductor or the deductee, but not both as per provisions of Section 54 of the CGST Act. Further, deductor can not claim refund once the amount deducted has been credited to the electronic cash ledger of the deductee.
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