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TDS Provisions Under GST Act

  • Following persons are responsible for deducting tax:–
    1. A department or establishment of the Central or State Government, or
    2. Local authority, or
    3. Governmental agencies, or
    4. Such persons or category of persons as may be notified by the Central or a State Government on the recommendations of the Council.
  • The rate of TDS is 1% under GST.
  • If the total value of supply under a contract exceeds ₹ 2.5 lakhs then the person/entity would be liable to deduct TDS.
  • No TDS if location of supplier and the place of supply is different from recipient’s registration address.
  • For deducting TDS, value of supply shall be excluding Central, State, Union Territory, Integrated Tax and Cess of the invoice.
  • The deductor would be liable to make the payment of TDS by the 10th day of the next month.
  • The deductor needs to issue a certificate of such TDS to the deductee within 5 days of deducting TDS mentioning therein the contract value, rate of deduction, amount deducted, the amount paid to the appropriate Government and such particulars as may be prescribed.
  • If deductor fails to furnish TDS certificate to deductee as mentioned above then he will be liable to pay late fee of ₹ 100 per day subject to maximum of ₹ 5,000/- for non-issue of TDS certificate.
  • Non-deduction / short deduction / non-payment or short payment of TDS is an offence under the Act for which a minimum penalty of ₹ 10,000/- & maximum of amount not-deducted / short deducted / not-paid or short paid whichever is higher is prescribed under the Act.
  • The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of Section 39, in the manner prescribed. Any amount deducted as TDS and reported in GSTR-7 will automatically reflect in electronic cash ledger.
  • Refund of the excess amount deducted:
    1. In case the amount is claimed by deductee in electronic cash ledger then refund to deductor is not possible. However, deductee can claim a refund of tax subject to refund provisions of the Act.
    2. In case the amount is not so claimed by deductee:

    Refund of erroneous excess TDS deducted is possible to deductor, subject to refund provision and procedure of the Act.

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