HOW TO CLAIM TDS IN GST
Tax Deducted at Source (TDS) is one of the ways to collect tax based on certain percentages on the amount payable by the receiver on goods/services. The collected tax is a revenue for the government.
EXAMPLE:
| Selling price of 10 Typewriters @ Rs. 10,000/- per typewriter (Taxable Value) | Rs. 1,00,000 |
| If the rate of tax (CGST) on Typewriter is 28% | |
| CGST @ 14% | Rs. 14,000 |
| SGST @ 14 % | Rs. 14,000 |
| Total Invoice Value | Rs. 1,28,000 |
| How to deduct TDS on GST bill given above ? TDS to be calculated on the base (taxable value) = Rs. 1,00,000/- TDS rate in GST = 1% (CGST) and 1% (SGST) Calculation to be made excluding the tax amount (Rs. 1,28,000 (-) Rs. 28,000) In the given example TDS calculation would work out to be Rs. 1,00,000 x 1 % = Rs. 1,000 (CGST) Rs. 1,00,000 x 1%. = Rs. 1,000 (SGST) |
As per section 51 of the CGST Act, tax at source is required to be deducted by the Government departments from the payment made or credited to the supplier in specified situations of supply of goods and services or both. The supplier of such cases takes into account the amount so deducted and makes the balance payment of tax to the government.
THRESHOLD LIMIT OF TDS DEDUCTION APPLICABLE
The tax would be deducted @2% (1% CGST and 1% SGST or 2% in case of IGST) of the payment made to the supplier of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh fifty thousand rupees (excluding the amount of Central tax, State tax, Union Territory tax, Integrated tax and cess indicated in the invoice). Thus, individual supplies may be less than Rs. 2,50,000/-, but if contract value is more than Rs. 2,50,000/-, TDS will have to be deducted. However, no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory, which is different from the State, or as the case may be, Union Territory of registration of the recipient.
REGISTRATION OF TDS DEDUCTORS
A TDS deductor has to compulsorily register without any threshold limit. The deductor has a privilege of obtaining registration under GST without requiring PAN. He can obtain registration using his Tax Deduction and Collection Account Number (TAN) issued under the Income-Tax Act, 1961.
GOVERNMENT DEPARTMENTS TO DEDUCT TDS
The CGST Act specified the following Government departments empowered to deduct tax at source section 51(1) of the Act:
(a) a department or establishment of the central Government or state Government, or
(b) local authority; or
(c) Governmental agencies.
(d) Such person or category of persons as may be notified by Central or State Governments on the recommendation of the GST Council.
RATE OF TDS UNDER GST
According to section 51(1) of the CGST Act, tax @ 1% would be required to be deducted for CGST and SGST both and deposited from the payments made or credited to the supplier of taxable goods and services as may be notified by the Central or State Governments on the recommendation of GST Council.
TDS PAYMENT TO THE GOVERNMENT
As per Section 51(2) of the CGST Act, the amount of tax so deducted is required to be deposited to the credit of appropriate Government (Central Government for CGST and IGST, State Government for SGST) account within 10 days after the end of month in which such deduction was made.
TDS CERTIFICATE UNDER GST REGIME
According to Section 51 (4) of the CGST Act, a certificate is required to be issued by deductor to deductee within 5 days of deposit of tax by deductor to the respective Government account.
The certificate to be issued by deductor will have information of:
(a) Total Contract value.
(b) Total amount deducted.
(c) Rate of TDS.
(d) Amount paid to the appropriate government.
As per section 51(4) of the CGST Act, if any deductor fails to issue the certificate within time- limit of 5 days of deposit of tax, he shall be liable to pay late fee of Rs. 100/- per day for the period starting from the expiry of 5 days period until it is issued to deductee. However, the maximum late fee will be restricted to Rs.5,000/-.
CREDIT OF TDS UNDER GST
TDS credit received is a facility available after logging in to the GST portal. It can be filed by all the taxpayers who are making specified sales on the e-commerce platforms and/or entered into any kind of works contract with Government departments. The form is mostly similar to GSTR-2A as it auto-populates details from GST returns like GSTR-7 and GSTR-8 together.
Any GST portal user can click on ‘TDS credit received’ tile available on return dashboard after logging in. This can help them to claim or reject the credit of TDS deducted or collected by their corresponding Government deductor or e-commerce operator.
As per section 51(5) of the CGST Act, the deductee will take the credit of TDS deducted from his payments on the basis of TDS certificate. The deductee will claim the credit in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor filed for the transaction period.
DELAY IN DEPOSIT OF TDS UNDER GST
According to section 51 (6) , if any deductor fails to pay the Government the amount so collected as TDS within 10 days of following month, he will be liable to pay interest in addition to the amount tax deducted , interest for the period starting from the due date of deposit till the final date of deposit of TDS amount.
REFUND OF TDS UNDER GST
As per section 51 (8), in case of any excess or erroneous deduction of TDS, refund can be sought by deductor or deductee under the relevant section 54 of the CGST Act.
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