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Analysis of TDS provisions under GST

TDS provisions under GST

1). Who is Liable to deduct tax at source (Persons covered)

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(a) A department or an establishment of the Central Government or State Government; or
(b) Local authority; or
(c) Governmental agencies; or
(d) Such persons or category of persons as may be notified by the Government,
(notified vide Notification No 33/2017 and 50/2018 – Central Rate dated 15.07.2018 and 13.09.2018 respectively):
(a) an authority or a board or any other body, –
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with 51% or more participation by way of equity or control, to carry out any function;
(b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
(c) Public sector undertakings.

2). When shall Tax be deducted at source

When the total value of taxable goods or services or both, under a contract, exceeds ` 2,50,000 (excludes central tax, state tax, UT tax and IGST and cess indicated in the invoice).

3). When shall tax NOT be deducted at source

No deduction of Tax is required when the location of supplier and place of supply is in a State / UT which is different from the State of the registration of the recipient.

4). What is the rate of Tax

Intra-State supply – 1% under CGST (1% of State /UT)
Inter-State supply 2%

5). On which value Tax shall be deducted

Total value of the taxable supply excluding central tax, state tax, union territory tax and Integrated tax and cess indicated in the invoice.
Meaning thereby Tax shall not be deducted on CGST, SGST / UTST or IGST and Cess.

6). Weather Tax is deductible on Exempted supply of Goods or Services or both

No, Tax shall not be deductible on Exempted and Nil rated supply of goods and services.

7). Whether Registration is mandatory for the Tax deductor

Yes, there is no threshold limit for this. Registration is mandatory under section 24(vi).
The registration can be obtained on the basis of TAN issued under the Income Tax Act, 1961, for deductors who does not have PAN.

8). Whether separate registration is required as Tax deductor to a person who is already registered as a supplier

Yes, deductor is required to get a separate registration as TDS deductor by using his PAN/TAN.

9). When Tax should be deposited

Tax shall be deposited within 10 days after the end of the month in which deduction was made.

10). How Tax should be deposited

Deductor shall file Form GSTR – 7 for depositing the Tax.

11). What are the provisions relating to the issue of TDS certificates under the GST law

TDS certificate in Form GSTR-7A to the concerned person within 5 days of depositing the tax to the government. (1)

 12).How deductee (Supplier) will get the benefit of TDS

Deductee will login to GST portal and accept the TDS reflecting there. After acceptance, TDS will automatically reflect in his Electronic Cash Ledger.

13). How Refund can be taken

Refund arising on account of excess or erroneous deduction, subject to the provisions of Section 54. Such refund may be claimed either by the deductor or the deductee, but not both.
Further, deductor cannot claim refund once the amount deducted has been credited to the electronic cash ledger of the deductee.

14). Any Late Fee or Interest applicability

Where deductor Fails to issue certificate in time, shall be liable to pay Late fee of `100 per day up to a maximum of `5,000 under the CGST and SGST Act separately.(2)
Where deductor Fails to deposit TDS in time, he shall be liable to pay Interest @ 18% for the delay period, as per provisions of Section 50(1) of CGST Act, 2017

15). Since when did these provisions come into force

October 01, 2018 (vide Notification No. 50/2018 dated 13.09.2018)

16). Whether a Public Sector Undertaking (PSU) shall deduct TDS on payment or credit made for a supply to another PSU.

No (Notification No.61/2018 CT dated 05.11.2018)
Note: It means Govt. departments/ establishments/ Agencies/ Societies/ Authorities / Board / Local Authority covered in the definition (shown at Sr. No. 1 of this table) shall deduct GST at source on payment made or credited for taxable supply to other Govt. Department. Only PSU to PSU supplies are exempted.

17). Whether TDS provision are applicable to Ministry of Defence

No (Notification No.57/2018 Central Tax dated 23.10.2018)


(1)Amendment by The Finance Act, 2020 (Effective date yet to be notified)
(1) A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed.

(2) Amendment by The Finance Act, 2020 (Effective date yet to be notified) sub-section (4) shall be omitted.
As such, no late fees will be levied on failure to issue certificate in time after the implementation date of the above amendment.

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