TDS Under GST Regime

gst section 97

Section 51 of the CGST Act, 2017 Dictates the authority and process for Tax Deducted at Source.

TDS to be deducted at Rate of 1% of the payment made to the supplier (the deductee) of taxable goods or services or both, where

  •  The total value of such supplyunder a contract, Exceeds Rs2,50,000 (excluding the amount of Central tax, State tax, Union Territory tax, Integrated tax and cess indicated on the invoice).

Thus, individual supplies may be less than Rs. 2,50,000/-, but if the contract value is more than Rs.2,50,000/-, TDS will have to be deducted.

But  no such 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.

  •  Case(1)  Supplier, place of supply and recipient are in the same state. It would be intra-State supply and TDS (Central plus State tax) shall be deducted

Supplier (i.e. the deductee) can take the credit for TDS in his electronic cash ledger.

  • Case (2) Supplier, as well as the place of supply, are in different states. In such cases, the Integrated tax would be levied.

TDS (Integrated tax) and it would be possible for the supplier (i.e. the deductee) to take credit for TDS in his electronic cash ledger.

  • Case (3Supplier, as well as the place of supply, are in State A and the recipient is located in State B. The supply would be intra-State supply and Central tax and State tax would be levied. 
  • In such case, transfer of TDS(Central tax + State tax of State B) to the cash ledger of the supplier (Central tax + State tax State A) would be difficult. So in such cases, TDS would not be deducted.

Hence, Thus, when both the supplier as well as the place of supply are different from that of the recipient, no tax deduction at source would be made.

Consequences of Non-Compliance of the aforesaid section;

1. TDS not deducted

 Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law.

2.TDS certificate not issued or delayed beyond the prescribed period of five days

The Late fee of Rs. 100/- per day subject to a maximum of Rs. 5000/-

3.TDS deducted but not paid to the Government or paid later than 10th of the succeeding month

Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law.

4.Late filing of TDS Return

The Late fee of Rs. 100/- for every day during which such failure continues, subject to a maximum amount of Rs.5000.

Courtesy: cbecgst.gov.in

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