Difference between TDS in Income Tax and TDS in GST

TDS means Tax deducted at source. It means the income is taxed as and when you earn. The concept of TDS is applicable in both Acts – newly introduced GST and the Income Tax Act. So, with the help of this blog, let’s get the deep insights. The below table represents the differences between

TDS under Income Tax and TDS under GST in a summarised form.

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S.No. Particulars TDS under Income Tax TDS under GST
1 Deductor Every person who is making the specified payments mentioned under the Income Tax. However, individual or HUF whose books are not required to be audited is exempted from deducting TDS. The deductors specified in the GST Act are as under : i) Central Government or State Government (ii) Local authority (iii) Governmental agencies (iv) Other Notified persons.
2 Deductee The Receiver of the payment shall deduct TDS. The supplier of taxable goods or services or both shall deduct the TDS.
3 Taxability arises on If the amount of payment increases the threshold amount specified under particular sections of the Income Tax Act, 1961 then only taxability shall arise. If the total value of supply under a contract of taxable goods or services or both, exceeds Rs. 2,50,000/- then TDS is required to be deducted.
4 Rate of Tax The rate of tax differs as specified under different sections. It may also depend upon the nature of the expense, For eg.
  •  u/s 194J – TDS to be deducted @ 10% on the technical/professional services,
  • u/s 194DA – TDS to be deducted @ 1% on Premium paid for any life insurance policy etc.
The Rate of tax for intra-state supply is @ 2% [i.e. 1% for CGST & SGST/UTGST component each] & for inter-State supply it is @ 2% [as IGST].
5 Registration As and when the liability to deduct TDS arises then it is necessary to take the Registration. Provision of Compulsory registration is there for all the deductors of TDS. Further,  if they are already registered under GST then also separate registration is required as a TDS deductor.
6 Payment Generally, the 7th day of the next month is the due date for payment. However, for the month of March, the date of payment is 30th April* For Gov deductors it is 7 April The due date for payment is 10 th of the next month.
7 Return The various types of returns are 26Q,24Q,27Q etc. The TDS Return is filled in FORM GSTR-7.
8 Credit The amount of TDS deducted during the year reflects in Form 26AS. Further, the credit of TDS can be taken while filing the ITR. The amount of TDS deducted would be available in FORM GSTR 2A/4A and credited in receiver’s electronic cash ledger.
9 Certificate TDS certificates are issued by deductor (Payer) to the deductee (Payee) from Dept website. Examples of TDS Certificates are Form 16, Form 16A, Form 16 B and Form 16 C. The deductor shall issue the deductee a certificate in FORM GSTR 7A.
10 Interest and late fees Late fees is levied amounting to Rs.200 per day but shall not exceed the amount of TDS. If the certificate is not issued within 5 days of crediting then the deductor shall pay a late fee of Rs. 100/- per day under CGST Act & Rs. 100/- per day under SGST/UTGST Act respectively. However, the maximum amount shall not exceed Rs.5000/-.

TDS under Income Tax Act is a well-known term but the same under GST has so much ambiguity. Hope, after going through the above table you must got a better understanding of the TDS concepts under both these acts. For detailed knowledge about TDS on GST or All insights about TDS in Income Tax, must read our blogs!!

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CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.