TDS under GST Regime – 9 Most Important Questions Answered

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TDS under GST Regime – 9 Most Important Questions Answered

TDS under GST Regime – 9 Most Important Questions Answered. Section No: 51 of CGST/SGST Act, made applicable to IGST vide Section 20 of IGST Act and UTGST vide Section 21 of UTGST Act. This article explains Tax deduction at source as per Goods & Service Tax Act 2017, TDS Certificate, TDS Due Dates etc…GST Applicability date, Short term and long term impact on GST & latest updates related to Tax deduction at source (TDS) under GST Regime. Lets understand what is the Tax deduction at source under GST, Applicability of GST in GST Regime, GST rates, its impact on your business and latest updates about GST Act 2017. Now check more details for TDS under GST Regime as per CGST Act 2017…

What is GST?

Tax deduction at source, TDS under GST Regime

Q1. What is Tax deduction at source?

Ans. Tax deduction at source (‘TDS’) is a mechanism wherein the recipient of goods or services will deduct out of the amount payable to the supplier, an amount at a percentage of value of supply and deposit the same to the account of the Government within the time prescribed.

Q2. What is the rate of TDS?

Ans. The rate of TDS is 1% of the value of supply.

Q3. Who is liable to deduct tax at source?

Ans. The Central Government or state Government may mandate the following person to deduct tax at source;

  • (a) a department or establishment of the Central 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 Central or a State Government on the recommendations of the Council.

TCS under E-Commerce GST Regime

Q4. Whether person liable to deduct tax, make TDS even if the supplier has charged GST in his invoice?

Ans. Yes, the taxable person shall deduct the tax irrespective of whether GST is charged in the invoice or not.

Q5. What is the threshold limit for tax deduction at source?

Ans. The threshold limit for tax deduction at source is rupees 2.5 Lakh. For the purpose of computation of threshold limit, contract value needs to be considered and not the invoice value or payment amount. However, for the purpose of ascertaining the threshold limit, the value of supply shall be considered as the amount excluding taxes.

Q6. What are the compliances to be adhered to by the deductor and specify the due dates for the same? Ans. The following are the compliances to be adhered to by the deductor and the due dates for the same:

Payment of TDS Issue of Certificate
The deductor is liable to pay the amount deducted from the supplier to the Government within 10 of the subsequent month The deductor is liable to issue Certificate to the deductee within 5 days from the date of payment of tax to the Government

Q7. What will happen if the deductor fails to issue TDS Certificate within the time prescribed?

Ans. If the deductor fails to issue TDS Certificate within the time prescribed, the deductor shall be liable to pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of the five day period until the failure is rectified, subject to a cap of five thousand rupees.

Q8. If the rate of GST on the supply on which TDS is applicable is 18% and TDS @ 1% is made at the time of payment, will the effective rate of tax become 19%?

Ans. No, tax deducted at source by the deductor is available to deductee as credit. Therefore, the deductee will effectively pay tax at only 18% (17% by cash/input tax creditand 1% by utilization of TDS credit).

Section 109 of GST – Constitution of Appellate Tribunal

Q9. Is interest applicable on non-payment of TDS?

Ans. Yes, the deductor shall be liable to pay interest in accordance with the provisions of Section 50 (1) for failure to pay the amount deducted as tax.

Other Important Information

How can the deductee claim benefit of TDS?

  • TDS amount deducted & reported in GSTR-7 will automatically reflect in electronic cash ledger.
  • The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor in the manner prescribed.

Refund of the excess amount deducted

In case the amount is not claimed by deductee in electronic cash ledger:

  • Refund to deductor is not possible such case. However, deductee can claim a refund of tax subject to refund provisions of the act. Practically it is not possible to claim any erroneous deduction of TDS by the deductor.

In case the amount is not so claimed by deductee:

  • Refund of erroneous excess TDS deducted is possible to deductor, subject to refundprovision and procedure of the act.

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