Expert Guidance For TDS Under GST

Expert Guidance For TDS Under GST

TDS under GST is required to be deducted by registered persons while making payment to the registered suppliers. Consequently, the TDS amount so deducted is to be deposited with the government.

Who has to deduct TDS under GST?

As per the TDS provisions under GST, the following persons are responsible for deduction of TDS under GST
A department or establishment of the Central Government or State Government, or
– Local authority, or
– Governmental agencies, or
– Such persons or categories of persons as may be notified by the Government.

In addition to the above, as per the notification on the date 13th September, 2018, following entities also need to deduct TDS:
– An authority or a board or any other body set up by a Parliament or a State Legislature or by a government with 51% equity (control) owned by the government
– A society under the establishment of Central or any State Government or local authority and the society which has registration under the Societies Registration Act, 1960
– Public Sector Undertakings

Also Read: GST Registration for Multiple Businesses

When does deduction of TDS take place?

The deduction has to take place where the total value of taxable goods or services, under an individual contract, exceeds Rs. 2,50,000. Furthermore, the TDS rate under GST that is applicable is 2%.

Also Read: Works Contract under GST

TDS under GST

On what amount is TDS applicable?

For TDS deduction, the value of supply is the amount excluding the tax on the invoice. This means there is no deduction of TDS on the CGST, SGST or IGST component of the invoice

Also Read: Rules related to setting off of Input Tax Credit

For example, supplier BSNL makes a supply worth Rs. 10,000 to Ramit. The rate of GST is 5%. When Ramit pays BSNL, he/she will pay Rs. 10,000 (worth of Supply) + Rs. 500 (GST) to BSNL and Rs. 200 (RS. 10,000*2%) as TDS to the government. Therefore, in simple words, there is no deduction of TDS on the tax element (GST) of a transaction.

Cases where there is no deduction of TDS under GST

As per the TDS provisions under GST, there is no deduction of TDS under GST if the location of the supplier and the place of supply is in a State or Union Territory which is different from State or Union Territory of the recipient.

Illustration

Location of supplier

Place of supply

Place of recipient

Type of GST

TDS applicability

TDS %

Delhi

Delhi

Delhi

CGST & SGST

Yes

1% each

Delhi

Punjab

Delhi

IGST

Yes

2%

Delhi

Punjab 

Mumbai

IGST

Yes

2%

Delhi

Delhi

Mumbai

CGST & SGST

No


Registration requirements for TDS deductors

The TDS provisions under GST states that a person who is liable to deduct TDS has to compulsorily register and there is no threshold limit for this. Furthermore, the person can obtain GST Registration without PAN and by using the existing Tax Deduction and Collection Account Number (TAN). Thus, having a TAN is mandatory.

tds under gst

Due date of deposit of TDS to the Government

The due date of deposit of TDS by the deductor is 10th of the succeeding month. Consequently, the payment shall be made to the appropriate government, which is
– Central Government in the case of IGST and CGST
– State Government in the case of SGST

Also Read: GST e-way bill [Ultimate Guide]

Issuance of TDS certificate under GST law

Similar to the Income Tax laws, the person deducting tax under GST has to issue the TDS certificate under GST. The TDS Certificate under GST is Form GSTR-7A. GSTR-7A is to be issued to the concerned person within 5 days of depositing the tax to the government. However, GST portal will automatically make GSTR-7A available to the deductee on the basis of GSTR-7 filed.

Penalties for not complying with TDS provisions under GST

Particulars

Penalty

TDS not deducted

Interest is to be paid @ 18% along with the TDS; else the amount shall be determined and recovered as per provisions.

TDS certificate has not been issued or delayed beyond 5 days

A late fee of Rs. 100 per day will be charged (subject to a maximum of Rs. 5000)

TDS is deducted but not paid to the government or paid after the 10th of the following month

Interest is to be paid @ 18% along with the TDS; else the amount shall be determined and recovered as per provisions.

Late filing of TDS return

A late fee of Rs. 100 per each day of delay will be charged (subject to a maximum of Rs. 5000)

Also Read: Penalty Under GST Act Detailed Guide By TaxHelpdesk

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