TDS (Vs) GSTR1

Hi Subba Rao! You’ve raised a very practical and common issue regarding the mismatch in timing between GST filings (GSTR-1) and TDS payments. Here’s a detailed explanation and some suggestions:

The Conflict Explained

• Supplier’s perspective: The supplier raises and reports the invoice in January (GSTR-1 for Jan), as per invoice date.

• Receiver’s perspective: The service receiver receives the invoice late (say, 8th Feb) and books the expense in February.

• TDS due date: The receiver has to deposit TDS by 7th Feb for Jan month’s payments, but they haven’t received or recorded that invoice yet.

• This causes a timing mismatch between GST (reported in Jan) and TDS (paid/booked in Feb).

What are the implications?

• GST reconciliation challenges arise as supplier and receiver have different records for the same invoice month.

• TDS deduction and payment may get delayed or mismatch with GST records.

• Accounting and compliance complications for receiver and supplier.

Current rules and practices

• TDS on payments is to be deducted at the time of credit of payment to the payee, not necessarily at the time of invoice issuance.

• But the due date of TDS deposit is the 7th of the next month in which payment is credited.

• So, if the payment or credit is made in Feb, TDS has to be deducted and deposited by 7th March.

• GSTR-1 is filed monthly for the month in which invoice is issued by the supplier.

Practical Suggestions

1. Book invoices based on actual receipt date

   • Receiver should ideally book the invoice when it is received or services are consumed.

   • This can cause a mismatch with supplier's GST reporting, but it’s correct from accounting perspective.

2. TDS payment based on credit/payment date

   • Deduct and deposit TDS in the month when the payment or credit is made to the supplier.

   • So, if invoice is received in Feb, deduct TDS in Feb and deposit by 7th March.

3. Maintain reconciliation statement

   • Both supplier and receiver should maintain reconciliation to address such mismatches.

   • Receiver can notify supplier about any discrepancies.

4. GST and TDS are governed by different acts

   • GST returns are based on invoice issuance.

   • TDS is based on payment or credit.

   • Hence, mismatch is natural and expected.

5. No official change in due dates yet

   • As of now, due dates for TDS deposit remain 7th of the next month.

   • CBDT/CBIC have not officially shifted TDS due dates post-GSTR1 filing.

Summary

If your organization faces this issue repeatedly, it’s good to coordinate with suppliers and accounting teams to minimize timing gaps and prepare reconciliation reports.

Would you like me to help draft a reconciliation template or guidelines for your team?