Provisions of TDS under GST

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Introduction-

The Provision of TDS under GST is effective from 01^st October 2018, under Notification No. 50/2018- Central Tax dated 13^th September 2018.

The Person who is liable to deduct TDS under GST-

The following persons are required to deduct TDS-

A department or an establishment of the Central Government or State Government; or
Local authority; or
Governmental agencies; or
Such persons or category of persons as may be notified by the Government.

The following persons have been notified by the Govt. on which the provisions of TDS on GST would be applicable-

An authority or a board or any other body, -
1. Set up by an Act of Parliament or a State Legislature; or
2. Established by any Government, with fifty-one per cent or more participation by way of equity or control, to carry out any function;
Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
Public sector undertakings.

See the related post : What is CGST SGST and IGST

Rate of TDS under GST-

TDS will be deducted @ 2% (1% on CGST + 1% SGST or 2% for IGST).

When TDS to be deducted-

TDS to be deducted at the time of payment or credit to the supplier of taxable goods or services, if the total value of supply under the contract exceeds Rs. 2,50,000/-. TDS will be deducted on the base value i.e. before the taxes like CGST, SGST, UTGST or IGST.

Example 1-

Mr. X, (Supplier) makes a supply worth Rs. 5,60,000 i.e. Value Rs. 5,00,000 and GST @ 12% is Rs. 60,000 to any government company (established by state government or central government). Provision of TDs will be applicable because value of supply exceeds Rs. 2,50,000/- and TDS will be deducted @ 2% on Rs. 5,00,000 i.e. Rs. 10,000 (TDS not to be charged on the GST tax amount)

See the related post : Provisions of TCS under GST

When No TDS will be deduced-

If the contract value does not exceed Rs. 2,50,000/-, the applicability of TDS on GST, is considering individual contact value not the value of total number of contacts.

If the location of registration of recipient is different from the location of supplier and place of supply. Given below the table to understand clearly-

Situation	Location of Supplier	Location of Recipient	Place of Supply	Whether TDS charged or Not
1	Punjab	Delhi	Punjab	No TDS will be charged because location of the recipient is different from location of supplier & place of supply.
2	Punjab	Delhi	Delhi	TDS will be charged @ 2% because location of the recipient or place of supply is same, IGST applicable
3.	Punjab	Punjab	Delhi	TDS will be charged @ 2% because location of the recipient or location of the supplier is same, IGST applicable
4	Punjab	Punjab	Punjab	TDS will be charged @ 1% each of CGST or SGST totaling @ 2% because location of the recipient or location of the supplier or place of supply are same, CGST or SGST applicable

See the related post : Why Registration of GST required in India

Registration as separate TDS deductor under GST-

Separate registration is required to be taken even if you are registered as Tax Payer. Now, you have to take registration as Tax Deductor.

The application for registration can be filed electronically, by submitting a duly signed application "Form GST REG-07" by the deductor. The registration under GST can be obtained without PAN, such persons will indicate their TAN in the registration application. TAN number (Tax Deduction Account) is mandatory.

Registration certificate to be issued in REG-06. If the said officer is satisfied that a person no longer liable to deduct tax, he may cancel registration in REG-08.

Time limit for payment of TDS-

The deductor shall be required to pay the deducted amount of TDS within 10 days after the end of the month in which such deduction is made. Otherwise interest will be paid along with the amount of TDS till the default continue. It shall be paid to-

the Central Government in case of CGST or IGST; or

the State Government in case of SGST

Example, 2-

TDS deducted of Rs. 10,000 (2% of Rs. 5,00,000) on account of IGST sale, in the month of October 2018, it should be deposited till 10^th November 2018.

Time limit for issuance of TDS Certificate-

TDS certificate is required to be issued by deductor, in "Form GSTR-7A" to the deductee, within 5 days of crediting the amount to the Government, otherwise the deductor should be liable to pay a late fee of Rs. 100/- per day from the expiry of the 5th day till the certificate is issued. This late fee would not be more than Rs. 5000/-.

See the related post : GSTR-9-Annual Return for Normal Registered Taxpayers

Credit of TDS deducted-

The deductor is required to file the return on time, which contains the detail of deducted amount of TDS. When deductor pays the amount of TDS, it will be reflected into the GST electronic cash ledger of the deductee. The deductee can use the said credit, for payment of other taxes.

GST Return Filing-

The deductor is liable to file GST return in "FORM GSTR-7" within a period of 10 days from the end of the month, otherwise the deductor should be liable to pay a late fee of Rs. 100/- per day for each day for which the failure continues subject to a maximum of Rs. 5000/-.

Refund of excess amount of TDS deducted-

Any excess amount deducted or paid to the Government shall be dealt for refund, however, if the deducted amount is credited to the electronic cash ledger of the supplier, the same shall not be refunded.