TDS on GST

Concept Of TDS on GST : 

The concept of TDS under indirect taxation was not prevalent under erstwhile law. Also, TDS on GST provisions were not introduced along with the introduction of the Goods and Services Tax. Accordingly, a special procedure is laid down for the same in case of TDS on GST.

Provisions relating to tax deduction at source under GST, is made effective from 1st October 2018. Notably, it is excluded under most of the common provisions and procedures to be followed under GST like composition scheme; registration application; returns; payment of tax etc. 

In the present article we will figure out the provisions relating to TDS; understand the section and rule covering GST provisions relating to filing of Form GSTR-7, what is TDS on GST? and briefly understand everything about the filing of Form GSTR-7.

TDS on GST Provisions

Let us understand in brief all the following provisions relating to TDS on GST-

  1. Persons liable to deduct TDS under section 51;
  2. What is Registration procedure to be followed by the TDS deductor;
  3. Rate of TDS deduction;
  4. Payment of amount deducted as TDS; and
  5. Flowchart covering the coverage applicability of TDS.

Who is liable to deduct TDS under section 51

Notification no. 33/2017- Central Tax dated 15th September 2017 lists down the categories of persons who is liable to deduct TDS. The same is highlighted hereunder

TDS on GST liability

TDS on GST Registration Procedure 

The person liable to deduct TDS under provisions of section 51 of the Central Goods and Services Tax Act, 2017 is mandatorily required to obtain GST registration irrespective of the threshold exemption limit. The GST registration procedure is briefed hereunder-

  • STEP 1 – The person liable to deduct TDS under section 51 should file a registration application in Form GST REG-07;
  • STEP 2 – The proper officer will carry out due verification;
  • STEP 3 – Post verification and confirmation, the proper officer will issue a registration certificate in Form GST REG-06; and
  • STEP 4 – As and when the person is no longer liable to deduct TDS, the proper officer may cancel the GST registration and communicate the same in Form GST REG-08.

What is current TDS rate?

The person is liable to deduct TDS @ 1% CGST + 1% SGST or 2% IGST. It is important to note down the following points –

  • TDS is to be deducted only when the total value of the supply under a contract is more than INR 2.50 Lakhs; and
  • The value of supply shall exclude the tax reflected in the invoice like CGST, SGST, IGST, UTGST or cess.

When is TDS Applicable

The amount deducted in form of TDS is to be deposited to the Government within 10 days of the end of the respective month.

Entire applicability or not with regard to the provisions of TDS under GST is summarized in the following flowchart
TDS on GST Payment deduction

TDS on GST in GSTR-7 Rule Covering Provisions

TDS deduction under the provisions of section 51 is required to furnish monthly GST returns in Form GSTR-7. Following section and rule deals with the GSTR 7 filing process under GST law

Section 39(3) of the Central Goods and Services Tax Act, 2017; read with

Rule 66 of the CGST Rules, 2017.

The gist of both the above section as well as TDS new rules is summarized hereunder –

Relevant section/ rule

Particulars

Section 39(3) of the CGST Act

Registered person liable to deduct tax at source under provisions of section 51 of the CGST Act is required to furnish a monthly return within ten days in the prescribed form.

Rule 66 of the CGST Rules

  • Sub-rule (1) states that return is to be filed in Form GSTR-7;
  • Sub-rule (2) states that the details furnished by the deductor in Form GSTR-7 will be made available to the deductee in order to claim the amount of TDS in the electronic cash ledger post verification;
  • Sub-rule (3) states that, on the basis of the return filed by the deductor in Form GSTR-7, the TDS certificate will be made available to the deductee in Form GSTR-7A.

Everything About the GSTR 7 Filing Process

GSTR-7 Filing

Let us understand all the following points attached with the GSTR-7 return filing –

  1. The due date for filing of Form GSTR-7;
  2. GSTR-7 filing process Steps by step guide; and
  3. Coverage of GSTR-7 return filing.

GSTR 7 due date

As per provisions of section 39(3) of the CGST Act, the deductor is liable to furnish a return in Form GSTR-7 within 10 days of the succeeding month. Accordingly, the monthly due date of furnishing of Form GSTR-7 is tabulated hereunder-               

Relevant section/ rule

Particulars

April

10th May 

May

10th June

June

10th July

July

10th August

August

10th September

September

10th October

October

10th November

November

10th December

December

10th January

January

10th February

February

10th March

March

 10th April

GSTR-7 Return Filing via GST Portal

The deductor needs to follow the below steps for filing Form GSTR-7 through the GST portal –

STEP 1 – Visit https://www.gst.gov.in;

STEP 2 – Click ‘Login’;

STEP 3 – Provide appropriate ‘Username’, ‘Password’ and ‘Characters’;

STEP 4 – Click ‘LOGIN’;

STEP 5 – Click ‘Return Dashboard’;

STEP 6 – Select ‘Financial Year’ and ‘Return Filing Period’ from the drop-down list;

STEP 7 – Click ‘Search’; and

STEP 8 – Select the mode of filing of Form GSTR-7 i.e., ‘PREPARE ONLINE’ or ‘PREPARE OFFLINE’.

Details to be Provided in GSTR-7

Sr No.

Particulars

Details

1.

GSTIN

15 digit Goods and Services Tax Identification Number of the Deductor

2.

Legal name of the Deductor


Trade name of the Deductor, if any

This will be auto-populated

3.

Following details are to be provided-

  • GSTIN of the deductee;
  • Amount paid to the deductee on which tax is deducted;
  • Amount of tax deducted at source (bifurcated into Integrated tax/ Central tax/ State or UT tax).

4.

Amendments to details of tax deducted at source in respect of any of the earlier tax period

Following details are to be provided-

  • Original details-
  1. Month;
  2. GSTIN of the deductee;
  3. Amount paid to the deductee on which tax is deducted.
  • Revised details-
  1. GSTIN of the deductee;
  2. Amount paid to the deductee on which tax is deducted;
  3. Amount of tax deducted at source (bifurcated into Integrated tax/ Central tax/ State or UT tax).

5.

Tax deduction at source and paid

  • Description of Integrated Tax/ Central Tax/ State or UT Tax;
  • Amount of tax deducted;
  • Amount paid.

6.

Interest, Late fee payable and paid

  • Interest amount payable and paid;
  • Late fee payable and paid.

7.

GST Refund claim from electronic cash ledger

  • Integrated tax, Central tax and State or UT tax bifurcated into Tax/ Interest/ Penalty/ Fee/ Other/ Debit Entry nos.
  • Bank Account Details.

8.

Debit entries in ‘Electronic Cash Ledger’ for TDS/ interest payment (populated after payment of tax as well as submission of return).

Integrated tax, Central tax and State or UT tax bifurcated into Tax paid in cash/ Interest/ Late fee

GSTR-7 Form View-Point of Deductee

GSTR-7 importance

The person liable to deduct TDS (i.e., deductor) is required to furnish a monthly return in Form GSTR-7.  GST return filing via Form GSTR-7 is also important from the view-point of the deductee. The reason for the same is explained hereunder

  • TDS certificate and GSTR-7A will be accessible to the deductee, on the basis of Form GSTR-7 submitted by the deductor; and
  • Post submission of Form GSTR-7, TDS deducted and Input  Tax Credit under GST available thereon will be reflected in Form GSTR-2A of the deductee.

In nut-shell, it is important that the deductor timely and accurately files the return in Form GSTR-7.

TDS on GST Synopsis

The gist of the entire article is covered hereunder –

  • The concept of TDS under GST was made effective from 1st October 2018.
  • List of persons specified via notification no. 33/2017- Central Tax dated 15th September 2017 are liable to tax deducted at source under GST.
  • On the applicability of TDS in GST provisions , the person is liable to obtain GST registration. Notably, the threshold exemption limit does not apply to such person.
  • The deductor is required to deduct TDS @ 1% CGST + 1% SGST or 2% IGST, as the case may be.
  • The amount of TDS deducted in a particular month is to be deposited within 10 days from the end of the month in which the tax is deducted.
  • The TDS deductor is required to furnish a monthly return in Form GSTR-7 within the 10th of the next month.
  • Once the TDS return in Form GSTR-7 is filed by the deductor, the TDS certificate in Form GSTR-7A will be accessible by the deductee.

CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator.

She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India.

She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

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