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TDS in GST to be deducted by Government and authorities specified by Government
As we all know that TDS in GST will come into force from 1St October 2018 as notified by Central government vide notification No.50-Central Tax-Dated 13-09-2018. So now it becomes necessary to know the concept of TDS in GST.
Let us discuss all the important points related to TDS in GST
A person who is liable to deduct TDS has to compulsorily register irrespective of the threshold limit.
The registration under GST is taken by using the existing Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act.
Person liable to deduct TDS
As per section 51(1) of CGST Act 2017, the following class of person shall be required to deduct tax at source on the payment made or credited to the supplier where the total value of supply excluding GST under a contract exceed Rs.2,50,000
- a department or establishment of the Central Government or State Government; or
- local authority; or
- Governmental agencies; or
- Following categories of person has been notified vide Notification No.33/2017-Central Tax Dated 15thSept 2017 under clause 51(1)(d)
- an authority or a board or any other body, –
- set up by an Act of Parliament or a State Legislature; or
- established by any Government,
- with fifty-one percent or more participation by way of equity or control, to carry out any function;
- society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
- public sector undertakings.
Rate of TDS & TDS certificate
TDS is required to be deducted at the rate of 2% (1% CGST + 1% SGST) at the time of credit or payment. No TDS is required to be deducted if the location and place of supply of supplier is different from the place of his registration.
Tax deducted shall be deposited with the government within 10 days of succeeding month. Further the person who deducted tax and deposited the same with government is required to generate TDS certificate in GSTR – 7A within 5 days of crediting amount to Government and issue to deductee. Failing to issue TDS certificate leads to late fee of Rs. 100/- per day subject to maximum of Rs 5000.
Once the return is filed by deductor, the amount of TDS deducted will be reflected in the electronic ledger of deductee.
The deductee can claim credit in electronic cash ledger of tax deducted and use it for payments of taxes
The person deducting tax is required to file a TDS return in form GSTR-7 within 10 days from the end of the month.
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