In the concept of TDS of the income tax act, taxes deducted by the specified person on the specified payments and deposit it to the Government. The person from whose income, tax has been deducted can claim the credit of the tax so deducted on the basis of tds certificate or 26AS. As the Income tax act, there are also the provisions of TDS under GST Act. Section 51 of the CGST Act, 2017 deals with TDS provisions. SGST Act 2017, UTGST Act 2017 & IGST Act 2017, subject to its own provisions, adopt these provisions mutatis mutandis.
In this article, I have mentioned the persons who are liable to deduct tds under GST, limit for tds, rate of tds, due date to deposit tds, who is liable to issue tds certificate, who can claim refund, penalty for not depositing tds on time and not issue tds certificate on time.
Who is liable to deduct TDS under GST?
The Central or a State Government may require the following to deduct TDS:-
- A department or establishment of the Central or State Government, or
- Local authority, or
- Governmental agencies, or
- Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council,
The persons who deduct TDS are known as “the deductor” and the persons whose TDS is deducted are called deductee.
What is the limit for TDS under GST?
Where the total value of such supply, under a contract, exceeds rupees two lakh and fifty thousand rupees, the persons making the payment has to deduct TDS. The value of supply should not included CGST, SGST, UTGST, IGST and cess indicated in the invoice.
What is the rate of TDS under GST?
The deductor has to deduct TDS at the rate of 1% from the payment made or credited to the supplier of taxable goods and/or services, as notified by the Government on the recommendation of the council.
What is the due date to deposit TDS in the account of Government?
The deductor has to deposit TDS in the account of Government 10th of the next month after the end of the month in which the tax deducted.
What is the penalty for not depositing TDS, in time to the Government?
The deductor shall have to pay interest according to the provisions of section 50(1), along with the amount of TDS deducted.
Who is liable to issue TDS certificate and what is the time limit for issuing TDS certificate?
The deductor has to issue TDS certificate in GSTR -7A to the deductee within 5 days from the date of depositing of TDS in the Government account. The deductor has mentioned the following in TDS certificate-
- contract value
- rate of reduction
- amount paid to the Government
- amount deducted
- any other particulars as may be prescribed
What is the late fee for not issuing TDS certificate in time?
If the deductor does not issue TDS certificate in time then deductor has to pay late fee which is Rs.100 per day from the 6th day till the date default continues. The maximum penalty cannot exceed Rs.5000.
Whether deductor can claim refund of excess deduction of tax?
Yes, the deductor can claim refund of excess deduction or erroneous deduction according to the provisions of section 54. but if the TDS has been credited to the electronic cash ledger of the deductee, then the deductor cannot claim the refund. In that case only deductee can claim it.
How the deductee can claim TDS?
The deductee shall claim credit the tax deducted and reflected in his electronic cash ledger in the return in FORM GSTR-7 filed by the deductor.
The Government can check whether the amount of tax deducted by the deductor is correct and there is no mismatch between the amount reflected in the Electronic Cash Ledger as reflected in the return filed by deductor.
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