There are certain category of persons for whom registration under GST act is mandatory irrespective of their turnover limits as specified in Section 22 (i.e. Rs. 10 lakhs for special category states and Rs. 20 lakhs for others). These categories have to get register themselves on mandatory basis under GST act by virtue of Section 24 of the act. Under this section, eleven category of persons are specified to take compulsory registration. Entry no (vi) of Sec-24(1) deals with registration requirement of persons who are required to deduct tax under section 51, whether or not separately registered under this Act. Thus the entry makes compulsory registration for TDS deductors separately under this act as deductor 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 the purpose of registration under GST, section 25 mandates for every person to have a permanent account number issued the Income-tax Act, 1961 in order to be eligible for grant of registration. But in case of person who required to deduct tax under section 51 may have, in lieu of a Permanent Account Number, a Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant of registration.
For taking registration as deductor, such person requires to submit the 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;
Effective date for enabling provision of TDS:
By virtue of Notification No-50/2018-Central Tax ,dt. 13-09-2018, Central government introduces the provision of TDS to be effective from 01st day of October, 2018.
Every such registered person have to furnish a return in Form GSTR-7 electronically through the common portal for the month in which such deductions have been made within ten days after the end of such month. After furnishing return as required, such registered person would have to issue certificate in Form GSTR-7A to the deductee which would be available electronically on the common portal.
Payment of TDS:
Any amount deducted under section 51 shall be credited to electronic cash ledger of the registered taxable person and the amount so deducted shall be paid by debiting the electronic cash ledger of such person. The amount deducted as tax under this section shall be paid to the Government by the deductor within ten days after the end of the month in which such deduction is made, in such manner as may be prescribed. Interest in accordance with section 50(1) is to be paid in addition to such amount if payment is not made within prescribed time.
Persons are required to deduct the TDS:
As per section 51 read with notification no 50/2018, dated 13/09/2018, following category of person would have to deduct tax at the rate of one per cent (effective rate would be 2 % i.e. 1 % as CGST and 1% as SGST) from the payment made or credited to the supplier of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees.
1. A department or establishment of the Central Government or State Government; or-Sec-51(1)(a)
2. Local authority; or- Sec-51(1)(b)
3. Governmental agencies;- Sec-51(1)(c)
4. Such persons or category of persons as may be notified by the Government- Sec-51(1)(d)- Notification No -50/2018
a. An authority or a board or any other body, -
i. set up by an Act of Parliament or a State Legislature; or
ii. established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;
b. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
c. Public sector undertakings.
No TDS deduction:
If location of supplier and place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient, No deduction is required to be made.i.e.
Value on which TDS is to be deducted:
The value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice
Late fees for non furnishing GSTR-7& GSTR-7A:
- For GSTR- 7:- Rs 100 per day subjected to maximum of five thousand rupees.
- For GSTR- 7A:-Rs 100 per day from expiry of five days period subjected to maximum of five thousand rupees.
Refund of TDS:
If there is an refund on account of excess or erroneous deduction of TDS, the same shall be dealt with in accordance with the provisions of section 54. But no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee.
Penalty for TDS Provision:
Where a taxable person who fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government, whichever is higher.