TDS under GST

TDS under GST
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TDS under GST

TDS under the GST mechanism has been made mandatory from 1st October 2018.
What is TDS under the GST mechanism?

The concept of TDS under GST is to collect tax from the very source of income. It is the responsibility of the person (deductor) who is liable to make payment to the specified person (deductee) to deduct the tax at source and deposit the same with the Government. The deductee will be entitled to get the credit of the amount deducted by the deductor.

When the provisions of TDS will be applicable under GST?

As per section 51of CGST Act,2017, the provisions of TDS will be applicable

  • when any person enters into a contract (one contract)
  • to provide taxable goods or services or both
  • to the persons notified u/s 51(1) [.e CG, SG, RBI, Local Authority, Govt. Agencies, PSUs, Rgd. Societies etc.]
  • which exceeds two lakh and fifty thousand rupees in value.
What is the effective date of implementation of TDS under GST?

In the 28th GST Council Meeting held on 21st September’18, it was recommended that the provisions of TDS u/s 51 of CGST Act,2017 should be introduced from 1st October’18. Central Board of Indirect Taxes & Customs had issued CGST Notification no. 50/2018 for the same on 13th September 2018.

Who is liable to deduct tax at source under the GST regime?

As per section 51(1) of CGST Act,2017, the following persons would be responsible to deduct tax at source

  1. A department or establishment of the Central Government or State Government; or
  2. A local authority; or (includes Panchayat, Municipality, Municipal Board, Zilla Parishad, District Board Cantonment Board, Regional Council, District Council, Development Board any other local authority of Central Govt. or State Govt. etc)
  3. Governmental agencies; or
  4. Such persons or category of persons as may be notified by the Government on the recommendations of the Council. (Notified vide CGST notification no. 33/2017 dated 15.09.17)

a) An authority or a board or any other body

  • set up by an Act of Parliament or a State Legislature and
  • established by any Government

having 51% or more participation/stake by way of equity or control, to carry out any function; or

b) A society established by the Central Govt. or the State Govt. or a Local Authority and registered under the Societies Registration Act, 1860; or

c) Public sector undertakings.

At what rate the tax should be deducted at source?

As per section 51(2) of CGST Act,2017, the amount of tax should be deducted at the following: –

  • In the case of intra-state supply, the tax should be deducted at the rate of 1% towards CGST and 1% towards SGST/UGST.
  • In the case of inter-state supply, the tax should be deducted at the rate of 2% towards IGST.
Which form of return needs to be filed for TDS?

The Monthly Return Form GSTR -7 needs to be filed electronically on GST Portal by 10th from the end of the month along with payment of TDS.

There is an option to preview of FORM GSTR-7  before filing, it can be viewed by clicking on ‘Preview Draft GSTR-7’ on the GST Portal.

After filing the TDS return on the GST portal a unique ARN will be generated which will be sent via an SMS and an email will be sent on registered mobile and email id.

It is not mandatory to file Form GSTR-7 every month. If there is no transaction that calls for a deduction of tax at source in a particular month, then the submission of FORM GSTR-7 is not required for that month.

Note: A TDS return FORM GSTR-7 once filed cannot be revised. The facility to rectify the amount of TDS deductible against a transaction of a specific GSTIN in a specific month is available.

What is the due date for filing FORM GSTR-7 the TDS return?

Due date of filing TDS return i.e FORM GSTR-7 is by 10th from the end of the month in which the TDS is deducted.

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.

Note: Due date of filing Form GSTR-7 can be extended by the Commissioner of State/Central tax through a notification in this regard. 

Payment of TDS 

When the TDS should be deposited to the Government?

As per section 51(2) of the CGST Act,2017, the deductor from the above shall pay to the Government within ten days from the end of the month in which such deduction is made.

What are the penal provisions with respect to late/non-payment of TDS or late/non-filing of return?

If the TDS is deducted but not paid or partly paid or return in FORM GSTR – 7 is not furnished within the due date then

  • As per section 51(5) of CGST Act,2017 – late fees prescribed u/s 39(3) of the CGST Act, 2017 will be levied
  • As per section 51(6) of CGST Act,2017 – Interest prescribed u/s  50(1) of the CGST Act, 2017
  • As per section 51(7) of CGST Act,2017 – Penalty prescribed u/s 122(v) of CGST Act, 2017 will be levied

will be levied.

LATE FEES u/s 39(3)  of the CGST Act, 2017 – FOR DELAY IN FILING RETURN

A late fee of Rs. 100/- per day under the CGST Act  & a late fee of Rs. 100/- per day under the SGST/UTGST Act will be levied for the period such failure continues. But the maximum amount of late fees that can be levied is Rs. 5000/- under CGST Act  &   Rs. 5000/- under the SGST/UTGST Act.

INTEREST u/s 50(1)  of the CGST Act, 2017 – FOR DELAY IN DEPOSITING TDS

Interest not exceeding 18% (as notified by the Govt.) will be levied on the amount of tax or any part thereof remains unpaid for the period of failure starting from the next day of the due date.

PENALTY u/s 122(v) of the CGST Act, 2017 FOR DELAY IN DEPOSITING TDS

The penalty will be

  • Rs. 20,000/- or (Rs. 10,000 towards CGST & Rs. 10,000 towards SGST/UTGST or Rs. 20,000 towards IGST)
  • An amount equivalent to the tax evaded or the tax not deducted

Whichever is higher.

How to make payment of TDS under GST?

GST return filing, GST registration or Payments/refunds/complaints under GST all would be done from one GST portal i.e www.gst.gov.in.  The deductor needs to generate a challan { CPIN } on the GST portal  & then deposit the tax deducted at source through either

  • E-payment mode [Net Banking/Debit-Credit card/NEFT-RTGS] or
  • Over the counter (OTC) Mode [Cash/Cheque/DD].
Is challan (CPIN) required for each bill separately?

No, it is not mandatory to generate a challan for each bill. There are two options for making the payment of TDS under GST

  • Option 1- By generating a challan for every payment made during the month or
  • Option 2- By bunching of TDS deducted from the bills on weekly, monthly or any periodic manner.
What is the proof of TDS paid to Govt. given to supplier/deductee?

As per section 51(3) of CGST Act 2017, it is the responsibility of the deductor to furnish  a certificate in FORM GSTR-7A to the deductee which will include the following

  • Name of the supplier,
  • GSTIN of the supplier,
  • Contract value,
  • Rate of deduction,
  • Amount deducted,
  • Amount paid to the Government and
  • Other particulars as may be prescribed.

This certificate(FORM GSTR-7A) needs to be furnished to the deductee within five days of crediting the TDS amount to the Government i.e within 5 days after filing the monthly TDS return (FORM GSTR-7). The credit would reflect against the name and GSTIN of supplier/deductee which needs to be either accepted or rejected by the supplier.

As per section 51(5) of CGST Act 2017, the amount of TDS so deposited will

  • reflect in FORM GSTR 2A/4A of the deductee
  • get credited in electronic cash ledger of the deductee
  • can be utilized by deductee for discharging his GST liabilities to Government.

Note: A TDS Certificate FORM GSTR 7A can be viewed and/or downloaded anytime from the GST portal after login. 

How FORM GSTR -7A need to be generated?

FORM GSTR 7A  cannot be separately generated by the deductor or anyone else. It is a system-generated TDS Certificate, which gets generated automatically on the filing of FORM GSTR 7 on the GST portal.

Click here to understand how to avail the TDS credit under GST?

Note: It does not require a signature of tax deductor. 

Note: If a supplier/deductee enters into various eligible contracts within a month with the deductor/receiver, so the tax would be deducted on each eligible contracts but a single TDS certificate will be issued per GSTIN per FORM GSTR-7 return filed by the deductor. 

Steps to download/view the FORM GSTR-7A for furnishing to the deductee

Step -1 Deductor/Deductee has to log in with valid credentials on the GST PORTAL

Step -2 Go to the Services tab > User Services tab> select the view/download Certificates option.

What if the proof TDS deposited to the Government is not given within the due date?

If the proof of payment i.e Certificate in FORM GSTR-7A is not furnished to the deductee within the prescribed due date i.e 5 days from filing FORM GSTR-7 then late fees will be levied as per section 39(3) of the CGST Act, 2017 read with Rule 66 of the CGST Rules, 2017.

As per section 51(4) of the CGST Act 2017, a late fee of Rs. 100/- per day under the CGST Act  & a late fee of Rs. 100/- per day under the SGST/UTGST Act will be levied from the day of the expiry of the due date until the failure is rectified. But the maximum amount of late fees that can be levied is Rs. 5000/- under CGST Act  &   Rs. 5000/- under the SGST/UTGST Act.

Is it possible for a deductor to take the refund in case of excess or erroneous deduction of tax?

As per section 51(8) of the CGST Act,2017, the deductor will not be granted any refund if the amount so deducted as TDS and deposited has been credited to the electronic cash ledger of the deductee.

Note: Provisions of section 54 of the CGST Act, 2017 relating to the refund will be applicable to both deductor as well as deductee for claiming a refund that arises on account of excess or erroneous deduction. 

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About CA Ankita Khetan 164 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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