Introduction
TDS introduced in GST is a mechanism to track or identify the transaction of supply of goods and/or services by making the recipient of such supply deduct a percentage of the amount to be paid to the supplier of such goods and/or services and deposit the same with the Govt.
When is Liable to Deduct TDS Under GST
- The TDS is deducted if the aggregate value of the contract exceeds a sum of Rs. 2.5 lacs
- For the purpose of determining the value of Rs. 2.5 lacs, taxable value has to be taken.
Who is liable to deduct TDS under GST?
The deductors of TDS can be one or more of the following:
- Department of Central or State Government.
- An establishment of the central or state Government.
- Governmental agencies.
- Local authority.
- Such a category of persons may be notified by Central or State Governments on the recommendation of the GST Council.
TDS Rate in GST
| Nature of Supply | Name of TDS | Rate of Tax |
| Location of the Supplier & Place of supply is in the same State /UT | CGST | 1% |
| SGST / UTGST | 1% | |
| Location of the Supplier & Place of supply is in the different States | IGST | 2% |
TDS Under GST with Example
A better understanding of TDS provisions under GST could be claimed from the example given below:
| The selling price of 20 printers @ Rs. 10,000/- per typewriter (Taxable Value) | Rs. 2,00,000 |
| If the rate of tax (CGST) on Printer is 28% | |
| CGST @ 14% | Rs. 28,000 |
| SGST @ 14 % | Rs. 28,000 |
| Total Invoice Value | Rs. 2,56,000 |
| Deduct TDS on the GST bill given above?TDS to be calculated (taxable value) = Rs. 2,00,000/-TDS rate = 1% (CGST) and 1% (SGST)excluding the GST tax amount (Rs. 2,56,000 (-) Rs. 56,000)TDS calculated on taxable valueRs. 2,00,000 x 1 % = Rs. 1,000 (CGST)Rs. 2,00,000 x 1%. = Rs. 1,000 (SGST) |
The time period of TDS be paid
The TDS amount is paid within ten days from the end of the month in which tax is deducted.
The payment made to the appropriate government which means the CG in case of the IGST and the CGST and the SG in case of the SGSTPre-conditions for filing FORM GSTR-7
Pre-conditions for Tax Deductor
- should be registered and should have a valid or active GSTIN
- should have a DSC in case return is to be filed through DSC
- made the payment credited to the supplier’s account.
While the tax deduction is not required to be made under GST:
The tax deduction is not required in the following situations:
- The cumulative value of the taxable supply is less than Rs. 2.5 Lakh under a contract
- The contract value is more than Rs. 2.5 Lakh for both taxable supply and exempted supply, but the value of taxable supply under the said contract is less than the Rs. 2.5 Lakh
- Receipt of services which are exempted
- Receipt of goods which are exempted. For example, goods exempted.
- Goods on which GST is not leviable. For example, petrol, diesel, petroleum crude, natural gas, aviation turbine fuel (ATF) and alcohol for human consumption, etc.
- Wherever the place and the location of supply are in a State or UT which is different from the State / UT where the deductor is registered.
- Wherever the tax is to be paid on reverse charge by the recipient i.e. the deductee.
- the payment is made to an unregistered supplier.
TDS Returns under GST:
Returns to be filed by a TDS deductor Every tax deductor is required to file return in FORM GSTR-07 by the 10th of the succeeding month in which such tax deduction is made.
For Ex: If TDS is withheld with respect to a payment or a credit to the supplier on 15th October 2020, such TDS amount has to be deposited to the Govt. by filing FORM GSTR-7 before 10th November 2020.
INTEREST ON LATE PAYMENT
If the TDS amount doesn’t pay or deposit before the due date, then he is liable to pay interest at the rate of 18%.
PENALTY ON NON-DEDUCTION OR SHORT DEDUCTION
IF the amount does not deduct or short deduction or non-payment or short payment of TDS is an offense under the act for which a minimum penalty of Rs 10,000/-
