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Tax deduction at source i.e. giving the receiver money after subtracting from it taxes has been an age-old concept. But, its inception in GST is quite recent. Now the notified classes of persons would be required to comply provisions of TDS under GST. In this blog, we will try to decode all related matters and get an in-depth understanding of the same.
BlogBlogTax Deduction at Source means when a payment is made to a person it is already adjusted for taxes. For eg. if payment of ? 5 lakh has been to, be made but, if the same is liable for TDS under GST, then net amount given to recipient would be ? 5 lakhs – 2%TDS = ? 4.9 lakhs.
Under the GST framework, notified deductors should deduct tax at rates specified before making payment for contacts exceeding ? 2.5 Lakhs
GST law provides for tax deduction at source through all its governing statutes, namely
TDS on GST was made applicable in India from 01.10.2018 vide Notification No. 50/2018 CT dated 13.09.2018.
The TDS needs to deducted under GST at following rates-
For Intra State SupplySome notified categories of person are required to deduct TDS under GST. There are
(set up by Parliament Act or State legislature or
established by Government)
Yes, TDS needs to be deducted only if the amount involved in the transaction exceeds ? 2.5 Lakhs. The limit of ? 2.5 Lakhs is to be checked before adding taxes under GST.
TDS provisions in GST apply to both
The only exception GST law provides for applicability of TDS in GST is when the location of supplier and place of supply is different from the place of registration of the recipient.
For eg: Supplier is located in Rajasthan and on the instruction of recipient (located in Gujarat) supply is made to a person in Rajasthan itself. In such case, it would be difficult to transfer TDS i.e. CGST and SGST of Rajasthan to cash ledger of supplier i.e. CGST and SGST of Gujarat. Hence, this transaction has been kept outside the purview of TDS under GST.
Yes, a deductor i.e person deducting tax needs to be compulsorily registered under section 24 of CGST or SGST Act, 2017. The registration has to be taken without any threshold limits. In addition to this, it can be taken even if the deductor does not have PAN, in this case, TAN should suffice the criteria of registration.
The tax deducted at source reflects in Electronic Cash Ledger of deductee. The amount can further be used as ITC to pay taxes or make other payments under GST.
The deductor must issue a certificate of such TDS deducted in GSTR 7A, within 5 days of deducting tax at source. Not complying with the same can attract
The tax shall be deposited with government by the 10th day of the month succeeding the month in which such tax was deducted. Say, the tax was deducted in Jan then the same shall be deposited to the government till 10th of February.
There are penal provisions under GST in case of various non-compliances such as
Yes, the concept of TDS (Tax Deduction at source) was there in erstwhile VAT Laws.
Yes, TDS deductor is required to furnish GSTR 7 monthly.
