TDS procedure under GST

 TDS procedure under GST  Uncategorized
Dec 242018
 

TDS procedure under GST

Legal background:

NN 50/2018 read as follows:

In exercise of the powers conferred by section 1(3) of the CGST and in supercession of the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 33/2017-Central Tax, dated the 15th September, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1163 (E), dated the 15th September, 2017, except as respects things done or omitted to be done before such supersession, the Central Government hereby appoints the 1 st day of October, 2018, as the date on which the provisions of section 51 of the said Act shall come into force with respect to persons specified under clauses (a), (b) and (c) of sub-section (1) of section 51 of the said Act and the persons specified below under clause (d) of sub-section (1) of section 51 of the said Act, namely:-

  1. an authority or a board or any other body, – (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;
  2. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
  3. public sector undertakings.

GST – TDS compliance in essence:

  • Recognize transaction on which TDS is to be deducted
  • Undertake TDS deduction under GST,
  • File GST-TDS returns,
  • Issue GST-TDS certificates and
  • Take-up all other entailing compliances

GST – TDS recognition provision:

Who will Deduct TDS:

a)           a department or establishment of the Central Government or State Government; or

b)          local authority; or

c)           Governmental agencies; or

d)          such persons or category of persons as may be notified by the Government on the recommendations of the Council.

The Central Government vide Notification No. 33/ 2017-Central Tax, dated 15th September, 2017 notified the persons under clause (d) of section 51(1) namely: –

(i)           an authority or a board or any other body, –

(a)   set up by an Act of Parliament or a State Legislature; or

(b)  established by any Government,

with 51% or more participation by way of equity or control, to carry out any function;

(ii)         society established by  the  Central  Government  or  the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);

(iii)       public sector undertakings;

 Transaction on which GST – TDS will be deducted:

GST TDS will be deducted in case contract value > Rs 250,000/-
Applicable rate of GST-TDS deduction:

Nature of Supply Rate of TDS
Intra-State supply (1% CGST + 1% SGST)
Inter-State supply 2% (IGST)

Practical issues:

Issues Solutions
Whether for the purpose of TDS deduction:

1.     Value of the whole contract is to be considered or

2.     Individual invoices even if each such invoice is raised for < Rs. 2,50,000/-

 Value of the whole contract for the supply of goods or services has to be considered.
What is included in term “Value” to consider whether contact is liable for TDS deduction or not? Value of supplies excluding CGST/ SGST/ UTGST/ IGST and cess.
Whether GST – TDS shall be deducted on retention amount? GST-TDS has to be deducted on the value including any retention monies withheld.
Whether GST – TDS forms part of cash ledger of deductee? Yes. However same is being route through Part C of FORM GSTR – 2A.
GST – TDS deducted on accrual basis? Either at the time of payment or credit to the account of deductee which ever is earlier.