TDS (Sec 51) in GST Act

Section 51 of the CGST Act provides for deduction of tax at source under certain circumstances. This section also lists out the deductor’s who are mandated by the central Govt to deduct tax at source, the rate of tax deduction and the procedure for remittance of tax deducted.

Liable to deduct TDS under GST law:

• A department or an establishment of the Central Government or State Government; or
• Local authority; or
• Governmental agencies; or
• Such persons or category of persons as may be notified by the Government.

When TDS to be deducted under GST:

TDS is required to be deducted where Deductees are the Suppliers whose total value of supply of Taxable goods and/or Services under a Contract exceeds Rs.250000/- exclusive of tax & cess as per the invoice.

Categories of Persons Not liable to deduct TDS under GST:

Tax is not liable to be deducted at source in the following cases:

• When Goods/Services are supplied from a public sector undertaking to another public sector undertaking, whether or not a distinct person.
• When supply of goods and/or services takes place between one person to another person specified in clauses a, b, c & d of Sec.51 (1) of CGST Act.

Registration of deductor of tax in GST:

• Section 24(vi) of the CGST Act, 2017 provides for compulsory liability for registration for the deductor’s of TDS.
• A deductor in GST will be required to get registered and obtain a GSTIN [Goods & Services Tax Identification Number] as a TDS deductor even if he is separately registered as a supplier.
• A deductor has to get himself registered through the portal www.gst.gov.in by using their PAN/TAN.

Deposit of TDS under GST with the Government:

The amount of tax deducted at source should be deposited to the Government account by the deductor by 10th of the succeeding month.

TDS Return under GST:

Every registered TDS deductor is required to file a Return in FORM GSTR 7 electronically within 10th of the month succeeding the month in which deductions have been made to avoid payment of any late fee, interest. [Section 39(3) of the CGST Act, 2017 read with Rule 66 of the CGST Rules, 2017.

Late fee, interest and penalty under GST in respect of TDS:

The provision of late Fees in respect of TDS in the GST is a layered provision:

• If the deductor has not remitted the amount deducted as TDS to the Govt within the prescribed time limit, he is liable to pay penal interest u/s.50 in addition to the amount of tax deducted.
• If the deductor fails to furnish the return in FORM GSTR-7 (under Section 39(3)) by the due date (i.e. within 10 days of the month succeeding the month in which deduction was made) he shall pay a late fee of Rs. 100/- per day under CGST Act &SGST/UTGST Act separately during which such failure continues subject to a maximum amount of Rs. 5000/- each under CGST Act & SGST/UTGST Act.
• If any deductor fails to furnish the certificate of TDS deduction to the deductee [i.e. the supplier] within 5 days of crediting the amount so deducted to the Government (i.e. furnishing return in FORM GSTR7), the deductor shall pay a late fee of Rs. 100/- per day under CGST Act & SGST/UTGST Act separately from the day after the expiry of 5-day period until the failure is rectified, subject to a maximum amount of Rs.5000/- each under CGST Act & SGST/UTGST Act.

Refund on excess/erroneous TDS deduction under GST:

The deductor or the deductee can claim refund of excess deduction or erroneous deduction. The provisions of section 54 relating to refunds would apply in such cases. However, if the deducted amount is already credited to the electronic cash ledger of the supplier, the same shall not be refunded.