Section 51 of the CGST Act, 2017 contains the provisions related to TDS. Following are the provisions related to TDS:
TDS provisions under GST are summarised below for a better understanding.
A. Applicability of TDS provisions:
The Central Government/State Government may mandate:
• A department or establishment of the Central or State Government, or
• Local authority
• Governmental agencies
• Such persons or category of persons as may be notified
It would be applicable where the total value of supply under a contract exceeds two lath and fifty thousand rupees ( Rs. 2,50,000).
B. Rate :
It is required to deduct tax @ 1% CGST and 1% SGST/UTGST or 2% IGST from the payments made to the supplier (For deducting TDS, the value of supply shall be taken as the amount excluding the tax indicated in the invoice).
C. Deposit of TDS to the Government:
The tax deducted by the deductor shall be paid to the appropriate
Government within 10 days from the end of the month in which the
deduction is made.
D. Failure to deposit TDS:
In case the deductor fails to pay the tax deducted to the Government, he shall be liable to pay interest in addition to the amount deducted.
E. Issue of Certificate of deduction:
On deducting the tax, the deductor has to furnish a certificate of deduction to the deductee within five days of crediting the amount deducted to the appropriate Government.
The certificate shall contain the contract value, rate of deduction, amount deducted, amount paid to the Government and any other details which may be prescribed.
F. Failure to Issue certificate:
Failure to furnish the certificate within timeframe will attract late fee of Rs. 100 per day after the expiry of five days till the failure is rectified, subject to a maximum amount of Rs. 5000.
G. Return for Tax deducted at source:
Deductor has to file a monthly return of tax deducted by 10th of the succeeding month in GSTR-7.
H. Credit of tax deducted in electronic cash ledger of deductee:
On the basis of the information reflecting in the TDS return of the deductor, the deductee can claim the credit in his electronic cash ledger of the tax deducted.
In case of excess deduction or erroneous deduction, refund to the deductor or deductee will be dealt in accordance with the refund provisions of the draft law.
However, there will be no refund to the deductor in case the amount deducted has already been credited to the electronic cash ledger of the deductee.