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Tax Deducted at Source (TDS) provisions under GST

CA Chanchal Jain 
on 04 August 2020

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TDS is a familiar term as far as it relates to income tax. Now, it prevails in Goods and Service Tax (GST) after the notification number 50/2018-Central Tax, Government notified the applicability of TDS from 1st October 2018 as the date on which the provisions of section 51 of the CGST Act comes into force.

TDS is the deduction at a specified rate by the deductor. Section 51 of the Central Goods and Services Tax (CGST) Act lays down the provisions of TDS. The section starts with the non-obstante clause. This means this clause empowers the provision to override the effects of any legal provisions contrary to this under the same law or any laws.

Tax Deducted at Source (TDS) provisions under GST

The following points explain the TDS provisions under GST:

Deductor

As per section 51(1) of the CGST Act, deductor will be:

a. department or establishment of the Central Government or State Government; or

b. local authority; or

c. Governmental agencies; or

d. Such persons or category of persons as may be notified by the Government on the recommendations of the Council.

Condition

TDS provisions are applicable only if total value of supply under a single contract in respect of taxable goods and services exceeds rupees 2.5 lakhs.

Effective date

TDS provisions would be operative with effect from 1st October 2018.

Separate Registration

The deductor must take registration as deductor even if registered as supplier.

Rate of TDS

TDS rate is 2% for inter-state supply i.e. Integrated Goods and Services Tax (IGST) and 1% each for intra-state supply i.e. Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).

Exempt

TDS provisions do not apply in case of exempt goods and services.

GSTR-7

Deductor must file GSTR-7 within 10th of the month succeeding the month in which deduction have made.

GSTR-7A

GSTR-7A is a system generated certificate to be issued by the deductor within 5 days of furnishing GSTR-7.

Late fees

Late fees shall be rupees 100 per day under CGST Act & SGST Act separately subject to a maximum amount of rupees 5,000 each under CGST Act & SGST Act.

The deductor must file GSTR-7 using login id and password as deductor within 10th of succeeding month of deduction. The amount of TDS will reflect in the GST portal of deductee. The deductee could claim the TDS after following the steps mentioned below:

 

Process to file TDS Return under GST

1. Log into the GST portal.

2. From the Services tab, click Return, and select TDS and TCS credit received.

3. Choose applicable Financial year and Return Filing Period. Click SEARCH.

4. The Dashboard will show all TDS or TCS entries for which credit has been received along with Goods and Services Tax Identification Number (GSTIN) of the deductor, taxable value, GST amount and other details.

5. Click the TDS Credit received box to show all the processed records/entries.

6. Select the checkbox for each entry and click the ACCEPT button.

7. The status will show ACCEPTED for all the selected entries. Click the BACK button to return to the Dashboard.

8. Scroll down to the bottom of the Dashboard and click PROCEED TO FILE.

9. Select the self-declaration checkbox and select the Authorised Signatory.

10. Click FILE TDS TCS CREDIT RECEIVED.

11. To submit the return, click FILE WITH EVC ( For companies and LLP, DSC is compulsory).

12. Enter the OTP received on the registered mobile number and email id, and click VALIDATE OTP.

The authors can also be reached at chanchaljain2007@gmail.com or ca.jain18@gmail.com.

 

Disclaimer: The above article is meant for informational purpose only and does not purport to be advice or opinion, legal or otherwise, whatsoever. While due care has been taken during the compilation of this article to ensure that the information is accurate to the best of our knowledge and belief, the contents of such article do not substitute for professional advice that may be required. The individual expressly disclaims all and any liability to any person who has read this document or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this article.


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