Some important clarifications on TDS under GST
Registration as a TDS deductor
⇒ Deductor needs to take a separate registration(GSTN) as a TDS deductor using PAN/TAN irrespective of the fact that it is separately registered as a supplier. [ Sec 24(vi)]
⇒ If one was registered as a deductor of TDS/TCS under the VAT Act, they will not get automatically migrated to GST.
⇒ One needs to register mandatorily only when they have to make a payment on which tax is required to be deducted.
⇒ There are no fees to be paid for obtaining a GST Registration on the common portal.
⇒ The process of registration is made online for the convenience of taxpayers, there is no need for submission of any hard copy for registration.
⇒ It is not mandatory to have a digital signature (DSC) for completing the process of online registration, it can be verified using OTP on a registered mobile number (EVC).
Who is held liable in case of non-compliance with TDS provisions?
DDOs (Drawing & distributor Office) of every Government office will be responsible for deducting tax while making/crediting payment under GST in applicable cases. DDO should update his DDO master details with the GSTN in the registration form as DDO will be personally liable for any lapses regarding TDS deduction.
Personal details entered in the registration form can be amended if there is any change in the office bearer. Amendment will not lead to any alteration in the GSTN of the deductor. A new DDO upon assuming of office should immediately amend such details if there is any lapse by the successor in office in the meantime the ex-DDO will not be liable.
Responsibilities of DDO in TDS under the GST regime
Following is the list of responsibilities that a DDO needs to fulfill with regard to compliance with TDS provisions under GST :
⇒ To know the GSTN of the deductor (i.e his office)
⇒ To have clarity on inclusions/exclusions from the contract value
⇒ To have clarity on when to deduct TDS under GST
⇒ To have clarity on the nature of TDS to be deducted (i.e IGST or CGST+SGST or CGST+UTGST)
⇒ To have clarity on the rate of tax for deduction
⇒ To make sure the correct GSTN is available for suppliers/vendors/deductee
⇒ To make sure that tax is deducted while making/crediting the payment to suppliers/vendors/deductee
⇒ To make sure that Challans( CPIN) are properly generated while depositing the deducted tax within the stipulated time
⇒ To make the payment of tax deducted in the appropriate Govt. A/c
⇒ Submit GSTR-7 the return for TDS within the stipulated time.
⇒ To furnish the form GSTR-7A (TDS certificate for suppliers) within the stipulated time.
TDS should not be deducted in the following cases
⇒ When the tax will be paid by deductee/recipient on the reverse charge basis.
⇒ If the supplier of taxable goods or service or both is an unregistered person.
⇒ For advances payment made prior to the implementation of TDS under GST ( i.e before 1st October 2018) which relates to the supply of taxable goods or services or both after 1st October 2018.
⇒ For the tax invoice issued prior to the implementation of TDS under GST(i.e before 1st October 2018 )(i.e supply of taxable goods or services or both before 1st October 2018) and payment after 1st October 2018.
⇒ The supplier/deductor may be registered under GST in a particular State/Union territory. Supply & place of service is different/other than the State/Union Territory to which the supplier is registered. For e.g. When the Govt. of Rajasthan engages a contractor of Gujarat for the renovation of Rajasthan Palace in Gujarat.
Total taxable value > 2.5 lakhs
⇒ TDS needs to be deducted only when the total value of the taxable supply of goods or services or both under one contract is more than 2.5 Lakh rupees.
⇒ TDS will be deducted based on the value of one contract and not on the value of supply. For e.g. Annual car rental service contract is for Rs. 6 Lakhs, but the monthly payment for the supply of service is only Rs. 50,000/- still TDS needs to be deducted as contract value is higher than 2.5 Lakhs.
⇒ If there is more than one contract for the taxable supply of goods or services with the same supplier whose combined value is more than Rs. 2.5 lakhs, but the value of each contract of taxable supply is below Rs.2.5 Lakhs then no deduction is required.
When calculating the total value of the one contract (i.e. more than 2.5 lakhs ) do not include
⇒ the tax payment towards CGST/SGST/UTGST/IGST & Cess.
⇒ the exempt supply of services notified in CGST(R) notification no. 12/2017 dated 28.06.17
⇒ the exempt supply of goods notified in CGST(R) notification no. 2/2017 dated 28.06.17
⇒ the goods or services which are outside the ambit of GST. for eg. petrol diesel etc.
⇒ the goods or services which are taxable at the nil rate under GST. for eg. fresh fruits & vegetables, cereals, etc.
TDS needs to be deposited in TDS-IGST or TDS-CGST & TDS-SGST or TDS-CGST & TDS-UTGST?
⇒ If supplier and receiver and place of supply of goods or services are in the same State then TDS-CGST & TDS-SGST needs to be deposited.
⇒ If supplier and receiver and place of supply is in the same Union Territory then TDS-CGST & TDS-UTGST needs to be deposited.
⇒ If supplier and receiver are both in one state but the supply is in another state then TDS-IGST needs to be deposited.
⇒ If a supplier and place of supply are in one state whereas the receiver is registered in another state then TDS will not be applicable.
⇒ If a receiver & place of supply are in one state whereas the supplier is in another state then TDS-IGST needs to be deposited.
GSTR -7 & GSTR-7A
⇒ It is not possible for a tax deductor to file the return before making the payment or crediting the amount to the supplier’s account in Government’s Treasury.
⇒ It is mandatory to file Form GSTR-7 only when there is a transaction that requires a deduction of tax at the source. If in any month there is no deduction, then no need to file the return for that particular month.
⇒ Supplier/Deductee has a right to accept or reject the transaction filed by the deductor/receiver in Form GSTR-7. After the deductor files the return, the TDS amount will auto-populate in the ‘TDS/TCS credit receipt’ table of respective suppliers. The supplier needs to verify whether the tax so deducted is correct or not and accordingly accept or reject, if it is accepted then the amount will be credited to the electronic cash ledger of the supplier and if it is rejected then the amount will auto-populate in the amendment table of next month’s FORM GSTR-7 of the deductor. And then the same process will be repeated until it is accepted by the supplier.
⇒ It is possible to download/view GSTR-7A the certificate of tax deduction at any time post-login by deductee/supplier.
⇒ Deductor/receiver can download the GSTR-7 JSON file uploaded for future records or for an update, addition, or deletion in the uploaded file.
⇒ There can be only one row for one GSTN. Duplicate of GSTN even for the different transactions/contracts in the same month is not allowed. So one entry for a consolidated amount for all the payments made & tax deducted needs to be done.