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TDS Provision Under GST




The concept of TDS is a simple concept incorporated under GST with the intent to tap the possible chances of revenue leakage and Prevent Tax Evasion. Under the Scheme the recipient deducts tax at the notified rate from the payment due to the supplier and deposits the tax into the government treasury on behalf of the supplier. When the supplier files return, he can claim credit of the tax paid by the recipient on his behalf. Section 51 of the CGST Act deals with the issue of TDS. Let us discuss in this article detailed analysis of TDS provisions.

Who will deduct the TDS on GST?

As per Notification No. 33/2017 Central Tax dated 15th Sept 2017, the following class of persons are required to deduct TDS on GST if the contract value is more than 2.5 lacs:

  1. 1. An Authority or board or any other body with 51% or more participation by way of equity of control
    • Set up by an Act of Parliament or a state Legislature; or
    • Established by any GOVT.
  2. Society established by the Central Govt. or State Govt. or a Local Authority under the Society Regulations Act, 1860.
  3. Public Sector Undertakings.
Apart from above 3 class of persons, no other class of persons have been notified by the Govt. However, the govt, has the power to notify such persons or category of persons on which such provisions of TDS under the GST Regime would get applicable.

Currently only above three class of persons are required to comply with the provisions of TDS in GST Regime and these provisions would be applicable.

Is TDS on GST 1% or 2%?

1% TDS is required to be deducted under the both CGST and the SGST Act and therefore the total TDS to be deducted is 2%. In case of an inter-state transaction, IGST would be lavied and 2% TDS would be lavied in this case as well.

For example: Suppose a supplier makes a inter-supply i.e. with in the same state worth Rs. 10,00,000 to a recipient and CGST @ 9% and SGST @9% is required to be paid. The recipient while making the payment of Rs. 1000 to the supplier shall deduct 1% TDS under the CGST and 1% TDS under the SGST Act and therefore the total TDS Deducted would be 2% which in the above case would be Rs. 20000.

In case the above supplier makes the inter-state supply, TDS @2% i.e. Rs. 20 would be required to be deducted and deducted with the GOVT.

The value for the purpose of computing the amount of TDS shall not include 18% GST.

WHEN IS TDS ON GST REQUIRED TO BE DEDUCTED:

TDS on GST is required to be deducted only if the contract value exceeds RS. 2.5 Lakhs. Moreover, it is required to be deducted only in the following 2 cases:
  1. Supplier, Recipient & Place of Supply are in the same state. This would be considered as a case of inter-state supply and TDS should be deducted in this case.
  2. Supplier, Recipient & Place of supply are in the different state. In such cases, IGST would be lavied as this is a case of inter-state supply.
The supplier shall take the credit of TDS in the above 2 cases in his electronic cash ledger.

TDS on GST is not required to be deducted in the following case irrespective of the contract value:
  1. Supplier as well as the place of supply are in the state A and the recipient is located in State B. The supply would be intra-state supply and CGST & SGST would be levied. In such cases, transfer of TDS (Central Tax + State Tax B) to the cash ledger of the supplier (Central Tax + State Tax A) would be difficult. Therefore, in this case, TDS would not be deducted.
DEPOSIT OF GST AND TDS CERTIFICATE

The amount of TDS deducted should be deposited with the govt. by the deductor by the 10th of the next month in the Form GSTR 7 through online portal. The deductor would be liable to pay interest if the tax deducted is not deposited within the prescribed time limit as mentioned above.

A TDS certificate would also be issued by the deductor (the person who is deducting the tax i.e. the recipient) in GSTR 7A to the deductee (the supplier whose payment is being deducted)within the 5 days of depositing the TDS with the Govt.

The TDS certificate is not issued within 5 days from the date of deposit with the Govt., the deductor would be liable to pay late fees of RS. 100/day. However the late fees levied should not be more than Rs. 5000.

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