TDS is introduced in GST w.e.f. 01.10.2018: All about TDS in GST Law
GST Law mandates Tax Deduction at Source (TDS) vide Section 51 of the CGST/SGST Act 2017, Section 20 of the IGST Act, 2017 and Section 21 of the UTGST Act, 2017. GST Council in its 28th meeting held on 21.07.2018 recommended the introduction of TDS from 01.10.2018. CBIC vide Notification no. 50/2018-CT dated 13.09.2018, has notified that above provisions TDS would be applicable w.e.f 01.10.2018.
Some important provisions relating to TDS in GST law are as given below:-
Following would be the deductors of tax in GST:-
(a) a department or establishment of the Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) 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; or
(e) a society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of1860); or
(f) public sector undertakings.
Registration of Deductor:-
Deductor is required to take registration [Sec 24(vi)] through common portal www.gst.gov.in by using PAN/TAN for deducting tax.
Threshold Limit :-
Tax is required to be deducted from the payment made / credited to a supplier, if the total value of supply under a contract in respect of supply of taxable goods or services or both, exceeds Rs. 2,50,000/- (Rupees two lakh and fifty thousand).
This value shall exclude the taxes leviable under GST (i.e. ‘Central tax’, ‘State tax’, ‘UT tax’, ‘Integrated tax’ & Cess).
Conditions and Rate of deduction:-Tax deduction is required if all the following conditions are satisfied –
(a). Total value of taxable supply > Rs.2.5 Lakh under a single contract. This value shall exclude taxes & cess leviable under GST.
(b). If the contract is made for both taxable supply and exempted supply, deduction will be made if the total value of taxable supply in the contract > Rs.2.5 Lakh. This value shall exclude taxes & cess leviable under GST.
(c). Where the location of the supplier and the place of supply are in the same State/UT, it is an intra-State supply and TDS @ 1% each under CGST Act and SGST/UTGST Act is to be deducted if the deductor is registered in that State or Union territory without legislature.
(d). Where the location of the supplier is in State A and the place of supply is in State or Union territory without legislature – B, it is an inter-State supply and TDS @ 2% under IGST Act is to be deducted if the deductor is registered in State or Union territory without legislature – B.
(e). Where the location of the supplier is in State A and the place of supply is in State or Union territory without legislature B, it is an inter-State supply and TDS @ 2% under IGST Act is to be deducted if the deductor is registered in State A.
(f). When advance is paid to a supplier on or after 01.10.2018 to a supplier for supply of taxable goods or services or both.
Tax deduction is not required in following situations:
a) Total value of taxable supply ≤ Rs. 2.5 Lakh under a contract.
b) Contract value > Rs. 2.5 Lakh for both taxable supply and exempted supply, but the value of taxable supply under the said contract ≤ Rs. 2.5 Lakh.
c) Receipt of services which are exempted. For example services exempted under notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 as amended from time to time.
d) Receipt of goods which are exempted. For example goods exempted under notification No. 2/2017 – Central Tax (Rate) dated 28.06.2017 as amended from time to time.
e) Goods on which GST is not leviable. For example petrol, diesel, petroleum crude, natural gas, aviation turbine fuel (ATF) and alcohol for human consumption.
f) Where a supplier had issued an invoice for any sale of goods in respect of which tax was required to be deducted at source under the VAT Law before 01.07.2017, but where payment for such sale is made on or after 01.07.2017 [Section 142(13) refers].
g) Where the location of the supplier and place of supply is in a State(s)/UT(s) which is different from the State / UT where the deductor is registered.
h) All activities or transactions specified in Schedule III of the CGST/SGST Acts 2017, irrespective of the value.
i) Where the payment relates to a tax invoice that has been issued before 01.10.2018.
j) Where any amount was paid in advance prior to 01.10.2018 and the tax invoice has been issued on or after 01.10.18, to the extent of advance payment made before 01.10.2018.
k) Where the tax is to be paid on reverse charge by the recipient i.e. the deductee.
l) Where the payment is made to an unregistered supplier.
m) Where the payment relates to “Cess” component.
The filing the TDS Return in FORM GSTR-7 can be done both through the online mode in the GST portal as well as by using the offline tool.
Time Limit, interest & Penalty :-
Make payment of deducted tax to the Government within 10 days after the end of the month in which deduction was made.
Submit return in Form GSTR-7 within 10 days after the end of the month in which deduction was made
Furnish system generated TDS certificate in Form GSTR-7A to the deductee within 5 days of crediting payment of TDS to the Government i.e. furnishing FORM GSTR-7.
Fails to furnish FORM GSTR-7 within due date:
Late fee payable (Section 47(1)): Rs. 100/- + Rs. 100/- per day (Maximum Rs. 5000/-) under CGST Act & SGST /UTGST Act separately.
Fails to make payment of deducted tax:
Both deducted tax and interest to be paid [Sec 50(1) read with Sec 51(6)]
Fails to furnish FORM GSTR-7A within due date:
Late fee payable [Section 51(4)]: Rs.100/- + Rs.100/- per day (Maximum Rs.5000/-) under CGST Act & SGST/UTGST Act separately
If excess amount deducted:
Refund may be claimed by the deductor / dedcutee as the case may be (if excess tax gets credited to the deductee then no refund shall be granted to the deductor)