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Analysis of TDS provision in GST effecticve from 01.10.02018

TDS provision in GST

We all know that with the introduction of notification 50/2018 (Central Tax) Dated 13.09.2018, TDS under section 51 of the CGST Act is coming into force from 01.10.2018.

Section 24(vi) deals with registration requirement of persons who are required to deduct tax under section 51, whether or not separately registered under this Act. Thus the entry makes compulsory registration for TDS deductors separately under this act as deductor even though they hold a separate registration number under any other category in act itself.

Governing provisions of TDS under GST:-

  • Section 51 of CGST Act
  • Rule 60(6) of CGST Rules
  • Rule 66 of CGST Rules

Persons who are required to deduct the TDS under GST
As per section 51 following category of person would have to deduct tax at the rate of one per cent from the payment made or credited to the supplier of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees.
1. A department or establishment of the Central Government or State Government; or-Sec-51(1)(a)
2. Local authority; or- Sec-51(1)(b)
3. Governmental agencies;- Sec-51(1)(c)
4. Such persons or category of persons as may be notified by the Government- Sec-51(1)(d)- Notification No -50/2018
a. An authority or a board or any other body, -

  • set up by an Act of Parliament or a State Legislature; or
  • established by any Government,

With fifty-one percent or more participation by way of equity or control, to carry out any function;
b. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
c. Public sector undertakings.

Deduction of TDS under GST will be as follows:

  • 1% CGST and 1% SGST of
  • Amount paid or credited to only the intra-state supplier, including unregistered supplier
  • Of taxable Goods or services both
  • If the value of such supply Under a contract Exceeds 2.5 lakh
  • Value excludes GST and Cess mentioned in the invoice.
  • So, TDS shall not be deducted on the GST component of invoice.
  • So, TDS shall not be deducted for inter-state sale

GST TDS Return, Dates & GST TDS Credit:-

  • The amount deducted to be paid & return GSTR 7 to be filed by 10th of the following month.
  • Details of deduction shall be made available electronically on the common portal.
  • Deductee may include the same in FORM GSTR-2. [R. 60(6)]
  • Deductee shall claim Credit in Electronic Cash ledger [Sec 51(5)]
  • TDS certificate to be furnished to the deductee by 15th of the next month as per Rule 66(3)
GST TDS Certificate shall be made available to the deductee, electronically on the common portal in GSTR-7A.