Under the GST regime, we’re dealing with three basic components to taxes. – CGST, SGST and IGST. In accordance with the GST law, certain registered people are legally required to take these tax deductions when making payments to registered suppliers. That is, TDS under GST shall be deducted, and then deposited with the government.
Recent News regarding TDS under GST
What exactly is TDS as part of GST?
Tax deducted at source (TDS) can be described as one method to collect taxes on certain percentages of the amount owed by the recipient on the purchase of goods or services. The tax collected is tax revenue that is used by the state.
The regulation governing TDS within GST is contained in Article 51 under the CGST Act to be read together with CGST Rule 66.
Who is entitled to deduct TDS pursuant to GST law?
- A department or institution of Central Government or State Government; or
- Local authority Local authority
- Governmental agencies; or
- These categories of persons that may be identified by the government.
According to the most recent Notification of 13th September 2018 the following organizations have to take deductions of TDS-
- A body or an authority or any other institution that was established by the Parliament or the State Legislature or by a government with 51 percent capital ( control) held through the federal government.
- A society set up with the help of either the Central Government, or the State Government or a Local Authority and it has been registered with the Societies Registration Act, 1860.
- Public sector companies.
Obligation for deducting TDS pursuant to GST as well as TDS rate
TDS is payable at a rate of 2 percent on the amount paid to the seller of tax-deductible products and/or services when the value of the supply, as per an agreement on its own, is more than Rs.2,50,000. Tax deduction is not necessary if the location of the provider and the location of delivery is different from the state of registration of the buyer.
What are the requirements for registration to register TDS deductors?
Anyone who is required to take deductions for TDS must declare their TDS deduction and there is no threshold threshold to do this. Registration under GST is possible with no PAN and through the tax deduction and collection account Number (TAN) provided by the Income Tax Act. Therefore, having a TAN is required.
What time and where do you think the TDS should be paid?
TDS must be paid within 10 days after the close of the month when tax is taken out. The tax is due to the appropriate authority, which is
- The Central Government in the case of the IGST and the CGST
- The State government in the context of the SGST
What are the regulations relating with the issue of TDS certificates in GST law? GST law?
Similar to the Income Tax Law, the person who deducts tax under GST is required to provide the TDS certificate, in the form GSTR-7A for the concerned person within five days of submitting the tax with the government. However, the GST portals immediately make GSTR-7A accessible to the person who is deducting tax in accordance with the GSTR-7 that has been filed.
What is the value of the supply from which TDS will be deducted and assessed?
In order to deduct TDS the amount of the purchase is determined as the sum that is less than the tax stated by the invoice. This implies that TDS cannot be taken out of the CGST or IGST part of the invoice.
For instance, a supplier A provides a service in the amount of Rs.5,000 towards B. Its tax rate GST is 18 percent. If B is paying A, the customer will have to pay Rs.5,000 (worth of supply) plus Rs.900 (GST) towards A. then Rs. 100 (RS. 5500*2 100 (RS. 5000*2) in TDS for the federal government. This means it is true that TDS does not count from the tax component (GST) of a transaction.
What form must be filled out to submit for the TDS return?
Taxpayers are required to submit the TDS return on GSTR-7 form within 10 days of the close each month. If the GSTIN of the supplier who is not registered is not accessible, their name may be included. The reliability of the system shows these details filled in within the electronic ledgers that the provider has.
What’s the value of TDS for Deductee (Supplier)?
As previously mentioned as stated above, there will be an automatic reflection on your electronic record of deductee (supplier) after the tax deductor submits his/her return. The tax deductor may claim credit in his cash ledger electronic of the tax deduction and use it to pay other taxes.
Penalties for non-compliance with TDS requirements under GST
Below table lists the penalties for non-compliance with GST TDS regulations:
| Scenario No | Scenario | Penalties |
| 1 | TDS not removed | The interest is due at 18% in addition to the TDS. If not, the amount must be determined and recouped according to the regulations. |
| 2 | TDS Certificate has not yet been issued or delayed for more than five days | A late cost of 100 rupees per day will be charged. 100 per calendar day is per day (subject the maximum amount of Rs. 5000) |
| 3 | TDS is deducted, but it is not payable to the government, or it is paid after the 10th day of the next month. | Interest will be paid at 18%, along with the TDS. In the event of a non-payment, the amount will be calculated and recouped in accordance with the applicable regulations. |
| 4 | Late submission of TDS return | A late cost of 100 rupees per day will be charged. 100 for each day that the delay is assessed (subject up to an maximum amount of Rs. 5000) |
How do I get TDS Refunds under GST?
If the excess amount is removed and transferred by the state, refund may be claimed because it doesn’t constitute tax sum that the government is entitled to. But, if the amount that was deducted is transferred to an electronic cash ledger of the provider and the added amount cannot be claimed as a reimbursement by the deductor. The deductee is entitled to an amount of tax refund that is subject to the provisions for refunds in the law. Solve Your Gst Refund Issues With My Gst Refund
