Tax Deducted At Source Under GST

Tax deducted at source is a system wherein specified person responsible for making certain specified payments (recipient of supply) is liable to deduct a certain percentage of tax before making payment in full to the supplier (deductee). This amount of TDS deducted is deposited to the government by the deductor and the deductee is allowed Tax Credit of such TDS amount.

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The concept of TDS has been introduced under sec 51 of GST Act with the intent to enhance the control on transactions and prevent tax evasion.

TDS Applicability

TDS is to be deducted where the total value of supply exceeds Rs.2,50,000 on prescribed supply.

TDS is not required when the location of supplier and place of supply is different from the State of the registration of the recipient.

TDS Liability

GST is liable to be deducted by the recipient @ 2% [2% IGST in case of intra state supplies/1% CGST & 1% SGST] on the taxable amount of supply.

Who Is Liable To Deduct TDS Under GST?

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

The following class of persons have been notified by Government-
An authority or board or any other body-

  • setup by an act of parliament or a state legislature or
  • established by any government,
  • Society established by CG or SG or local authority under society registration Act, 1860
  • PSU (Public Sector Undertaking)

Registration and Compliance for TDS Deductor

In compliance with the GST provisions, the tax deductor shall get registered under GST as TDS deductor by filing application for new registration on GST portal- https://www.gst.gov.in.

The tax deductor shall have valid TAN & PAN for the purpose of registration.

Penalty for non-compliance

  1. When TDS is not deducted/ deducted but not deposited/ late deposit – Interest is to be paid @ 18% along with the TDS.
  2. TDS certificate has not been issued or delayed beyond 5 days – A late fee of Rs. 100 per day will be charged (subject to a maximum of Rs. 5000).
  3. Late filing of TDS return – A late fee of Rs. 100 per each day of delay will be charged (subject to a maximum of Rs. 5000).

Setting up business

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DIN
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Indirect tax compliance

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Input tax credit claim
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