TDS under GST, After the implementation of GST in India, We are getting every week new amendments as the addition, deletion, and modification of rules of GST for example TDS under GST in India. As we know TDS is already under income tax but TDS under GST is different from TDS under income tax.
Because deductions of tax under the GST laws are required to be made wherever applicable while making payments to the suppliers of goods or services or both under GST for taxable supply of goods or services or both. Further, we need to know the type of person liable to deduct TDS under GST laws.
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TDS full form is Tax Deducted at Source (TDS). And as per section 51, TDS under GST means applicability of TDS for the Government and Government undertakings and other notified entities making contractual payments where the total value of such supply under a contract exceeds 250000 ₹ to suppliers.
In short, all types of DDOs are liable to deduct TDS which are listed below:
TDS is to be deducted at the rate of 2 % on payments made to the supplier of taxable goods and services, where the total value of such supply, under an individual contract, exceeds ₹ 2,50,000.
TDS is calculated as follows under GST
For example– TDS to be calculated on the base (taxable value) such as = ₹ 3,00,000, GST rate -28% and TDS rate in GST = 2% (1% CGST and 1% SGST). So here calculation to be made excluding the tax amount (₹ 354000 – ₹ 54000)=₹ 300000.
In the given example TDS will be 2% of ₹ 300000 = ₹ 6000
Yes, TDS and TCS 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.
₹ 2,50,000 is a limit amount as per Section 51(1) of the SGST/CGST Act, 2017, If the total value of supply of taxable goods or services or both exceeds two lakh and fifty thousand rupees, then TDS shall be deducted at the prescribed rate. Hence the threshold limit is Rs. 2,50,000.
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 the 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.
There will be an automatic reflection in the electronic ledger of the deductee (supplier) once the deductor files his/her returns in the form GSTR-7. The deductee can claim credit in his electronic cash ledger of this tax deducted and use it for payments of other taxes.
Similar to the Income Tax Law, the person deducting tax under GST has to issue the TDS certificate in form GSTR-7A to the concerned person within 5 days of depositing the tax to the government. However, the GST portal will automatically make GSTR-7A available to the deductee on the basis of the GSTR-7 filed.
For the purpose of deduction of TDS, the value of supply is to be taken as the amount excluding the tax indicated on the invoice. This means TDS shall not be deducted on the CGST, SGST, or IGST component of the invoice.
For example– Supplier M makes a supply worth Rs.250,000 to the N. The rate of GST is 18%. When N pays M, he/she will pay Rs.250,000 (worth of Supply) + Rs.45000 (GST) to M and Rs. 100 (RS. 5000*2%) as TDS to the government. So it can be said that TDS is not deducted from the tax element (GST) of a transaction.
A person who is liable to deduct TDS has to compulsorily register and there is no threshold limit for this. 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 mandatory.
Moreover, these all are the responsibilities of DDOs in TDS under GST to get their office registration under GST:
An Accountant, GSTP, GST blogger, Website Creator, SEO Builder & Co-founder of the website https://gstportalindia.in for the help of GST Taxpayers of India. Having a perfect accounting experience of more than 10 years in a Private Ltd Company.
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