TDS under GST: Criteria & Procedures

What is this?

TDS means Tax Deducted at Source. It is a tax which is to be deducted on some expenses and payments. As per Income Tax Act, 1961 persons are required to deduct TDS at different rates while making payments. Similarly as per GST laws, TDS is required to deduct on certain payments.

Rate of TDS in GST?

Rate of TDS 1%

If payment of contract is more than Rs. 250000/-

(The Amount of 250000 is excluding SGST, CGST, and IGST)

TDS is not to be deducted under GST if;

1.    Value is up to RS. 250000, or

2.    It is Interstate Sales

(No tax deduction required where the location of supplier and place of supply is different from the State of the registration of the recipient.)

Value of supply on which TDS shall be deducted:

For purpose of deduction of TDS, the value of supply is to be taken as the amount excluding the tax indicated in the invoice. This means TDS shall not be deducted on the CGST, SGST or IGST component of invoice.

Who is liable to deduct TDS under GST?

Following people are responsible for deducting tax-:

(a) A department of the Central or State Government,

(b) Local authority,

(c) Governmental agencies,

(d) Such persons or category of persons as may be notified, by the Central or a State Government

To whom would you pay the TDS?

TDS shall be paid to the appropriate government which means

    1.The Central Government in case of the IGST & CGST 

2. The State government in case of the SGST.

Duties of Deductor

     1. He has to take registration under GST (No limit of Rs. 20 Lacs)

     2. He has to obtain TAN No.

     3. He has to deposit TDS  by 10^th of next month

     4. He has to submit GSTR-7 Return TDS by 10^th of next month

     5. He has to issue TDS certificate within 5 days of depositing TDS i.e. by 15th of next month.

Interest & Penalties

      

  1. If any Deductor fails to pay to the credit of the appropriate     Government the amount deducted as tax

Interest shall be payable as per provision of section 50 and such rate shall not exceed at the rate of 18%

    2.  Penalty for Non Furnishing TDS Certificate in Time

Rs. 100/- per day till the failure is rectified but subject to maximum late fee of Rs. 5,000/-

Illustration:

Suppose If TDS is 2% under Income Tax Act and 1 % under GST & the Amount is 300000.

Then 300000*2% i.e. 6000 TDS as per IT act

300000*1% i.e. 3000 TDS as per GST

Deposit, Challan, Return of TDS should be made separately for both types of TDS.