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What is Tax Deducted At Source (TDS)


TDS under Section 51 (1) of CGST Act is yet to be made applicable as it has been deferred till the date and not being made effective on 1-7-2017.

It is pertinent to note that CGST Act gas proviso to Section 1 to the effect that 

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this act shall be construed as a reference to the coming into force of that provision.”

The effective Date of TDS is yet to be notified in future.

1. TDS Applicability:

It is applicable where the value of supply under a contract exceeds Rs. 2.5 lakhs.

2. Who is Deductor and Deductee in TDS: 

Central Government may mandate Certain department or agencies or person for deducting TDS such as:

a. A department or establishment of the Central Government or State Government;

b. Local Authority;

c. Governmental Agencies;

d. Such persons or category of persons as notified by the Government on the recommendations of the Council.

3. TDS Rate:

Deductor has to deduct the tax @ 1% from the payment that has to be made to supplier of taxable goods or services or both excluding the tax and cess indicated in the invoice. The value of taxes i.e. CGST, SGST, IGST are not to be added to arrive at the value of more than Rs. 2.5 lakhs for the applicability of TDS provision under the Act.

File TDS Return Online with Taxmann's One Solution Software.

4. Exception – No Deduction shall be made if:

a. The location of supplier and place of supply is in same State or UT which is different from the State or UT of registration of the recipient.

b. The value of the supply, under a contract is less than or upto Rs. 2.50 lakhs.

5. Tax Deposit by Deductor: 

Deductor has to pay the amount collected as tax to the government within 10 days after the end of the month in which tax was deducted at source.

6. TDS Return by Deductor:

Every deductor shall file a TDS return in Form GSTR-7 declaring TDS deduction as provided under sub-rule (1) of Rule 66.

7. Manner of Payment:

Any amount deducted as TDS shall be paid by debiting the Electronic cash ledger and electronic liability register shall be credited accordingly.

8. Information:  

The details furnished by the deductor under sub-rule (1) shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A and Form GSTR-4A on the common portal after the due date of filing of FORM GSTR-7.

9. TDS Certificate:  

Deductor has to mandatorily furnish a certificate to the supplier in FORM GSTR 7A under sub-section (3) of Section 51 read with sub-rule (3) of Rule 66. The certificate shall contain the value of contract, the rate of deduction, amount deducted as tax, amount paid to the government and other particulars.

10. Time Period: 

Deductor has to furnish the certificate to the supplier within 5 days of paying the tax so deducted to the government.

11. Credit of TDS: 

The Supplier shall claim credit through his Electronic cash ledger of the tax deducted by and reflected in the return of the deductor, which deductor would furnish to the tax administrative authorities under sub-section (3) of section 39.

12. Fails to Pay TDS: 

If any deductor fails to pay the amount deducted to the government then he shall pay interest in accordance with sub-section (1) of Section 50 in addition to the amount of tax deducted and the determination of the amount in default shall be made in the manner specified in section 73 or section 74.

13. Refund of Excess Amount: 

The refund to the deductor or supplier, as the case may be, arising on account of excess or erroneous deduction, then it shall be made in accordance with Section 54 of CGST Act which specifically deals with Refund of tax.

14. No Refund: 

As per proviso to sub-section (8) of Section 51, no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee.


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Disclaimer: This information is updated till 04 September 2017.

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