TDS is to be deducted from payments made to a supplier of any taxable goods or services or both If the total contract of such supply exceeds Rs. 2.5 lac.

For the purpose of deduction of TDS, the value of supply shall exclude the Central Tax, State Tax, Integrated Tax and Cess mentioned in the invoice.

The followings persons are liable to deduct TDS:

1. A department or establishment of the Central Government or State Government; or

2. Local authority; or

3. Governmental agencies; or

4. Such persons or category of persons as may be notified by the Government on the recommendations of the Council,

Presently TDS  provision not applicable to companies which are registered under companies act., which is private and not government undertaking company.

The registration can be done by GST REG-07.

There are 3 types of taxes in  IGST & CGST and SGST.

The deduction against intra- state supply will be CGST & SGST @ 1% each – to be deposited with the respective Governments Treasury.

The deduction against inter-state supply will be IGST @ 2%, to be deposited.

The deductor to generate a challan online in FORM GST PMT-06 on the Common Portal and make the payment to a Bank through e-payment, Net Banking/Debit-Credit card/NEFT/RTGS or on Bank Counter.

In case of default to pay the deducted TDS to the Government within 10 days after the end of the month in which such deduction is made, interest @18% shall be payable in addition to tax deducted.

The deductor is liable to pay a penalty of Rs. 10,000/- or an amount equivalent to the tax not deducted or short deducted or deducted but not paid to the Government, whichever is higher.

Monthly return in form GSTR-7 to be filed by deductors  within 10 days after the end of such month.

The deductors shall furnish to the deductee TDS certificate in Form GSTR-7A, within 5 days of crediting the amount so deducted to the Government, mentioning therein the contract value, rate of deductions, amount deducted, amount paid to the Government and other related particulars.

If the deductor fails to furnish TDS certificate within  5 days, the dedcutor shall pay a late fee of Rs. 100 per day (The maximum amount of Late Fee payable is Rs. 5,000/-)  from the day after the expiry of such five day period until the failure is rectified.

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Location: Rajasthan, IN
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  1. nitin shah says:

    my client is proprietor and doing govt contract works with material. he pass part contract work to other proprietary firm whether he has to deduct tds under gst and what will be rate.

    1. SIGNEXCEL says:

      your client forward some work to the sub contractor hence sub-contractor not get the contract from government establishment so not required to be deducted the TDS by your client, but govt. will deduct TDS on payment made to your client as he is working on govt. contract and contract awarded by govt. establishment.

  2. Anirudhan V says:

    Sir, What is the meaning of “Contract of Supply”. Whether the TDS is deductible for all kind of supplies or it is deductible only for contractors under works contract. Whether all dealers are liable to deduct tax for every supply. Please clarify the category liable for deduction of tax.

  3. SUDESH SHARMA says:

    Sir/ Madam,
    we are deducting tds for all supply contracts even less than 2.5 lacs. I sit that we continue with the deductions aas per the contract terms & conditions or, the GST System will not accept tds decuted for value less than 2.5 lacs

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November 2020