TOPIC TO BE COVERED
GSTR 7
Notification No. 50/2018 – Central Tax
SECTION 51 : CHAPTER X :PAYMENT OF TAX OF CGST ACT , 2017
(1) Latest Update as on 13th Sept 2018TDS under GST will be applicable from 1st October 2018.Under the GST regime we have the basic 3 kinds of taxes. –
(1) CGST,
(2) SGST
(3) and IGST.
In addition, as per the GST law, certain categories of registered persons will be required to deduct taxes while making payments to supplier i.e TDS and deposit it with the government. Let’s try to understand TDS related procedures under GST.
(1) What is TDS?
(2) Who could be liable to deduct TDS under GST law?
(3) When will the liability to deduct TDS be attracted? What is the rate of TDS?
(4) What are the registration requirements for TDS deductors?
(5) When and to whom should the TDS be paid?
(6) What are the provisions relating to the issue of TDS certificates under the GST law?
(7) How will the Value of supply on which TDS shall be deducted be considered?
(8) Which form is required to file the TDS return?
(9) How is Refund of TDS possible under GST?
1. What is TDS?
Concept of TDS came into Force from Income Tax Act, 1961, Basically for the purpose of tracking of income of the Taxable person .
TDS Refers to certain % of the amount which is to be deducted by the receiver of Goods/services on the amount payable on account of Supply made if Transaction Value as per Section 15 of CGST act 2017 exceeds 2.5 Lakhs .
(2) Who could be liable to deduct TDS under GST law? ( Section 51(1) )
A department or an establishment of the Central Government or State Government; or
Local authority; [Section 2(69)] or
Governmental agencies; or
Such persons or category of persons as may be notified by the Government.
As per the latest Notification dated 13th September 2018, the following entities also need to deduct TDS- Notification No. 50/2018 – Central Tax
the Central Government hereby appoints the 1 st day of October, 2018, as the date on which the provisions of section 51 of the said Act shall come into force with respect to persons specified.
An authority or a board or any other body which has been set up by Act of Parliament or a State Legislature or by a government, with 51% equity or control owned by the government.
A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860.
Public sector undertakings. (PSU)
(3) When will the liability to deduct TDS be attracted? What is the rate of TDS?
TDS is to be deducted at the rate of 2 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds two lakh fifty thousand rupees.
Example: For example Taxgen Team supplied certain machinery to PUBLIC SECTOR UNDERTAKING under an contract.
The total value of contract was Rs 2,49,999 plus GST as applicable. Tax is not liable to be deducted in such cases as contract value excluding taxes is below Rs 2,50,000.
CGST, SGST, IGST and Cess levied under GST has to be excluded for the purpose of determining total value.
Contract Value is to taken and not Individual Invoice Wise for Determination of Deduction Of TDS.
Proviso To Section 51(1) States that No deduction of Tax is required when the (1)Location of supplier(LOS) and (2)Place of supply(POS) is different from the State of the registration of the recipient (Those people who will deduct TDS )( ie LOR).
Reason : POS : Punjab , Supplier will Deposit CGST & SGST(PUNJAB) , But Receiver of Haryana cant pay TDS deducted to SGST(PUNJAB) , He can only deposit TDS to SGST(Haryana)LOCATION OF SUPPLIERPLACE OF SUPPLY LOCATION OF RECEIVERTDSTAXPUNJABPUNJABPUNJABYESCGST(PUNJAB)
SGST(PUNJAB)PUNJABHARYANAPUNJABYESIGST
(INTERSTATE ALWAYS TDS APPLICABLE)PUNJABPUNJABHARYANANOPROVISO TO SECTION 51(1)PUNJABHARYANATAMIL NADUYESIGST
(INTERSTATE ALWAYS TDS APPLICABLE)PUNJAB TAMIL NADUHARYANAYESIGST
(INTERSTATE ALWAYS TDS APPLICABLE)
4. What are the registration requirements for TDS deductors?
A person who is liable to deduct TDS has to compulsorily register under Section 24(VI)and there is no basic exemption limit. The registration under GST can be obtained without PAN and by using the existing Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act. Thus it can be said having TAN is Mantadory.
5. When and to whom should the TDS be paid? ( MONTHLY RETURN)
TDS shall be paid within 10 days from the end of the month in which tax is deducted. The payment shall be made to the appropriate government which means:
The Central Government in case of the IGST and the CGST
The State government in case of the SGST
6. TDS certificates
TDS certificate in form GSTR-7A to the concerned person within 5 days of depositing the tax to the government. Failure to do so will make the person liable to pay a late fee of Rs. 100 per day up to a maximum of Rs. 5000.
7.How will the Value of supply on which TDS shall be deducted be considered?explanation to section 51(1) Explanation.––For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.
TDS not to be deducted on the Tax component of Invoice Value.
8.Which form is required to file the TDS return?
The person deducting tax is required to file a TDS return in form GSTR-7 within 10 days from the end of the month. When GSTIN of the unregistered supplier is not available, their name can be mentioned. The robustness of the system reflects these filled-in details in the electronic ledger of the supplier.
9.How is Refund of TDS possible under GST? [ Section 51(8) ]
If any excess amount is deducted and paid to the government, a refund can be claimed as this is not the tax amount that the government has a right on.
However, if the deducted amount is already added to the electronic cash ledger of the supplier, the amount so added cannot be got back as a refund by the deductor. Deductee can claim a refund of tax subject to refund provisions of the act. ( Proviso to Section 51(8)
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