Newly introduced Provisions of TDS under GST Law

Newly introduced Provisions of TDS under GST Law

Newly introduced Provisions of TDS under GST Law will be in effect. At the advent of Not. No. 50/2018 – Central Tax Dated 13.09.2018.Newly introduced Provisions of TDS under GST Law will be in effect. At the advent of Not. No. 50/2018 – Central Tax Dated 13.09.2018.

Following persons, irrespective of being registered under GST provisions are required to registered specifically for this purpose and would be deducted under GST laws in the Concerned State/ UT (concerned State/ UT: the respective state or Union Territory where the deductor registered or situated) as follows:-

a. A department or establishment of the Central Govt. or State Govt.
b. local authority
c. Governmental agencies
d. an authority or a board or anybody, set up by an Act of Parliament or a State Legislature; or established by any Government, and having fifty-one percent or more participation by way of equity or control, to carry out any function.
e. The society established by the Central Government or State Government or local authority under the Societies Registration Act, 1860
f. Public sector undertakings.

Manner and quantum of deduction:

The above-mentioned persons are, hereinafter referred to as deductor, are required to deduct tax at the rate of 1% CGST and 1% SGST on the taxable value of goods or services or both.

a. At the time of payment made or credited to the supplier (deductee) of taxable goods or services or both,

b. Where the total value of supply, under a single contract, exceeds two lakh fifty thousand rupees, the deduction is to be made. i. e. Single contract value above Rs 2.5 Lakh and above.

c. Value for the purpose would be basic taxable value, i. e. excluding CGST, SGST, IGST, UTGST and cess charged.

d. Only when the supplier (deductee) is registered in the concerned state and the place of supply is also inside the concerned state, the deduction is to be made.

Necessary compliance with the Law related to TDS

Step: 1

Every person liable to deduct tax under section 51, shall apply for a registration electronically in form GST REG-07. After due verification, the proper officer shall issue a certificate in form GST REG-06 within three days of application.

Step: 2

Deduct GST @ 1% CGST & 1% SGST (i.e. as correctly charged by the inward supplier in his Tax Invoice) from the Basic Value of the Bill. The rate of TDS is to be computed on the value of supply excluding the GST amount.

The deduction is to be at the time of payment to the supplier or crediting his account.
However, two broad conditions for deductions are:

a. The supply should be a taxable supply of goods or services or both.
b. The total value of the contract exceeds Rs. 2,50,000/-

Step: 3

The amount that has been so deducted is to be deposited with the respective Government within 10 days from the end of the month in which such deduction is made. Such payment to the Govt. shall be made by debiting the electronic cash ledger. Further, the deductor is required to furnish a return in form GSTR-7 electronically along with all necessary details. The return cannot be filed without full payment of the liability. Copy of form GSTR-7 has been enclosed.
Note: The details that are furnished by the deductor in his form GSTR-7, shall be made available electronically to each of his suppliers in Part C of Form GSTR-2A on the common portal.

Step: 4

Within five days of payment of the deducted amount to the Govt., the deductor shall furnish to the deductee a certificate as mentioned in point no. 1.5 above. Such certificate shall be made available electronically to the deductee on the common portal in form GSTR-7Aon the basis of the return filed by the deductor.

CA Amresh Vashisht
Meerut
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