1. Section 51 of TDS
If the recipient of goods or services is covered under the below-mentioned list, then TDS deduction liability will arise in the hands of the recipient:
a. Local authority
b. Department of central or state government
c. Establishment of central or state government
d. Public sector undertakings, i.e., PSU
e. Government agencies
f. Entity that is under the control of the central government or state government or state governments or central & state government or central & state governments
g. Any other notified by the government.
Control: An entity in which a minimum of 51% paid-up equity shares are held by the government or governments.
Example: 20% equity shares held by CG, 15% held by Haryana govt. & 20% held by Mumbai govt. in A Ltd.
Answer: Sec 51 will be applicable because we will check the combined control of the central government & all state governments. If the combined percentage of all the government fulfills the requirement, then TDS liability will arise on A Ltd.
*** Only Indian governments are covered. If shares are held by foreign governments, then it will not be considered.
2. List of recipients who are covered under this section
- Punjab National Bank: PSU
- Sarva Haryana Gramin Bank: Statutory Body
- Punjab And Sind Bank: Any other body notified by the committee
- India Post Payments Bank Limited: Statutory Body
- Baroda U.P Bank: Statutory Body/Government agencies
- Karnataka Vikas Grameena Bank: Public Sector Undertaking, etc.
These are the recipients who are liable to deduct the TDS if all other conditions are satisfied.
3. Contract value
If the value of a single contract exceeds Rs. 2,50,000/-, then TDS liability will arise.
- We will consider the value of a single contract instead of multiple contracts.
- Contract value is excluding the GST component.
Example: Total 3 contracts entered between the parties of Rs 1,00,000 each.
Answer: TDS will not be applicable because the value of a single contract is not exceeding the specified limit.
4. Value on which TDS will be applicable
At the time of selling goods or services, GST is applicable on taxable value. Hence, TDS will also be levied on the same amount on which GST is levied.
5. Nature of supplies
- TDS will be applicable in the case of taxable supplies.
- TDS will not be applicable in the case of exempt supplies.
- TDS will not be applicable in the case of nil-rated supplies.
- TDS will not be applicable in the case of non-taxable supplies.
6. Rate of TDS
- IGST rate is 2%.
- CGST rate is 1% & SGST rate is 1%.
7. Liability of TDS
The recipient will deduct the TDS at the time of payment to the supplier.
8. Nature of items
- Goods
- Services
Contracts related to the purchase of goods or services are both covered under this section. The recipient will be deducting the TDS irrespective of whether they are dealing in goods or services.
9. Type of tax
- If CG & SG is levied on the invoice, then CGST TDS & SGST TDS will be levied at the rate of 1% each.
- If IGST is levied on the invoice, then IGST TDS will be levied at the rate of 2%.
10. GSTR-7
- The recipient will file the GSTR-7 on a monthly basis.
- Due date is the 10th of the next month.
11. Electronic cash ledger
After filing of TDS return, the supplier will accept the invoice details. After acceptance, all amounts will be credited in the cash ledger of the supplier in the tax head instead of the credit ledger.
12. POS rules
TDS is not applicable if the location of the supplier & place of supply is in the same state but the location of the recipient is in a different state (In such cases, ITC is ineligible & it will be reported in Table 4D(2) of GSTR-3B).
The author can also be reached at caashishsingla878@gmail.com
DISCLAIMER: The views expressed are strictly of the author. The contents of this article are solely for informational purposes. It does not constitute professional advice or recommendation. The author will not accept any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.
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