TDS provision under GST
There are certain category of persons for whom registration under GST act is mandatory irrespective of their turnover limits as specified in Section 22. These categories have to get register themselves on mandatory basis under GST act by virtue of Section 24 of the act. Thus mandatory registration is required for TDS deductors separately under this act even though they hold a separate registration number under any other category in act itself. So, the person who is required to deduct tax under Section 51 (i.e. deductor) would have to take registration under GST.
For taking registration as deductor, such person requires to submit application in Form GST REG-07 duly signed and verified on common portal. After due verification of the same, proper officer grant certificate of registration in Form GST REG-06 within 3 Working days from the date of submission of the application.
Other important provisions related to TDS have been highlighted below.
- The provisions of TDS have been notified and made effective from 01.10.2018
- Section 51 of CGST Act, 2017 Government may order the following person (deductor) to deduct Tax at source:-
- Department/ Establishment of Central/ State Government
- Local Authority
- Governmental agencies
- An authority or a board or any other body which has been set up by Parliament or a State Legislature or by a government, with 51% equity (control) owned by the government.
- 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.
- Public sector undertakings.
Section 51(1) – Applicability of TDS provision:-Where Total value of Taxable supply under the contract exceeds ₹ 2.50 lakhs (Excluding GST).
TDS is required to be deducted even if an individual invoice is less than ₹ 2.50 lakhs, if the total value of contract is exceeding ₹ 2.50 lakhs.
In the following cases TDS is not required to be deducted:-
- Total value of Taxable supply < ₹ 2.5 lakhs
- Contract value > ₹2.5 lakhs for both taxable supply and exempt supply but value of taxable supply under the contract < ₹ 2.5 lakhs
- Receipt of services which are exempted.
- Receipt of Goods which are exempted.
- Goods on which GST is not leviable.
- Where the payment is made to the unregistered supplier.
- Where tax is to be paid on RCM basis by recipient.
- All activities or transactions as specified in schedule-III of CGST/SGST Act, 2017.(Transactions which shall be treated neither as a supply of goods nor a supply of services.)
- Where any amount was paid in advance prior to 01.10.2018 and tax invoice has been issued on or after 01.10.2018,to the extent of advance payment made before 01.10.2018
- Where place of supply is in state different from the state in which deductor is registered. [Goods and services are not supplied to recipient where he is located but at another state or union territory.]
TDS deduction and payment:-
- 1% of CGST+1% of SGST= 2% [in case of intra state supply]
- 2% of IGST [in case of interstate supply]
- TDS is required to be deducted on net value excluding CGST,SGST/UTGST and IGST
- Deductor to pay tax deducted to the government within 10 days after end of month, in a prescribed manner.
- Person who is liable to deduct TDS has to compulsorily register and there is no threshold limit for this as stated above.
- Deductor is required to file TDS return in GSTR-7 within 10 days after end of each month.
- The details furnished by the deductor shall be made available electronically to each supplier in Part-C of GSTR-2A/ GSTR-4A for composition dealer.
- A TDS Certificate is required to be issued by deductor in GSTR-7A within 5 days of crediting the amount to the government.
- Deductee can reject the details filed by deductor, if he may find that amount deducted by deductor doesn’t pertains to his supply.
- The deductor shall furnish to the deductee a certificate manually mentioning therein contract value, rate of deduction, Amount deducted and paid to the appropriate government.
Credit of TDS in Electronic Cash register of deductee –There will an Automatic reflection in the Electronic ledger of dedcutee, once the deductor files his return.
Consequences of not complying with TDS provisions:-
|1||TDS not deducted||Interest to be paid along with the TDS amount, else the amount shall be determined and recovered as per the law.|
|2.||TDS certificate not issued or delayed beyond the prescribed period of five days||Late fee of Rs. 100/- per day subject to maximum of Rs. 5000|
|3||TDS deducted but not paid to the government or paid later than 10th of the succeeding month||Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law.|
|4.||Late filing of TDS returns||Late fee of Rs. 100/- for every day during which such failure continues subject to a maximum amount of five thousand rupees.|
* consequences of non-compliances as stated above are as prescribed under the Act and the same are subject to change from time to time as per the notification issued in this regard.