How to avail the TDS credit under GST?

how to avail the TDS credit under GST?
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How to avail the TDS credit under GST?

TDS credit under GST will not reflect automatically as it reflects for TDS credit under the Income-tax.

Provision of TDS under GST

TDS will be deducted under section 51 by Central Govt., State Govt., RBI, Local Authority, Govt. Agencies, PSUs, Rgd. Societies etc., when any person enters into a contract  of providing taxable goods or services or both (Note: one contract which exceeds Rs. 2.5 Lakhs in value.)

How will the credit of TDS reflect in the Supplier’s Electronic Cash ledger?
  • In case, you are supplying goods or services which is liable for deduction of TDS under GST. For availing and utilizing the TDS credit, acceptance or rejection on the Return Dashboard of the GST Portal is mandatory.
  • Only filing of GSTR-7 by tax deductor doesn’t mean the TDS credit will reflect in the account of deductee (Supplier) automatically.
  • The process of acceptance and rejection of TDS credit on the Return Dashboard needs to be done every month before filing the monthly return GSTR3B.
  • It must be noted that the TDS certificate (Form GSTR-7A) will be generated only when the deductee (Supplier) accepts the tax deduction (made by a bonafide TDS Deductor) under the “TDS and TCS Credit received” tab in the Returns dashboard. This needs to be made available to TDS Deductors.
  • But if the TDS deductee (supplier) rejects the tax credit for reasons like any inadvertent errors or inconsistencies in the tax deduction, then it will flow back to TDS Deductor for correction/rectification.
Why supplier has to accept or reject the TDS credit on the GST portal?

As Form GSTR-7 has been implemented for the first time from the month of October 2018, there are more chances of errors or mistakes in tax deduction or tax credit, so an intermediate step of either accepting or rejecting the amount has been introduced which will ensure that valid credit is credited to deductee’s Electronic cash ledger. Later it can be used for setting off of outward liability.

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About CA Ankita Khetan 165 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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