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SOP for TDS under GST is issued by the CBIC to clarify various aspects of applicability and procedure surrounding tax deduction at source under GST.
The GST Law requires certain categories of registered people to deduct tax while making payments to suppliers and deposit the same with the Government. Every registered person who is deducting TDS under GST is required to file a return in Form GSTR-7.
SOP for TDS under GST states that as per section 7 of the CGST Act, supply for TDS covers goods and services to the government departments and others as listed under ‘persons liable to deduct TDS under GST law’.
The specified individuals are required to deduct TDS if the total value of supply under a particular contract for the supply of taxable goods or services or both, exceeds Rs.2,50,000. This value shall exclude Central tax, State tax, UT tax, Integrated tax and Cess.
Let us understand the value of supply with the help of the examples below as per the SOP for TDS under GST:
|Supplier||Case||Value of taxable supply|
|A (registered + contract value is excluding GST)||He made taxable supply worth Rs.10,000 to a local authority where the contract for supply is Rs.10,00,000. Consider the GST rate to be 18%.||Here, the local authority makes payment of Rs.10,000 under a contract of Rs.10,00,000, which is above Rs.2.5 lakh. Hence, a tax deduction is required.|
Value of taxable supply = Rs.10,000 (CGST Rs.900 + SGST Rs.900)
Tax to be deducted @ 1% of Rs.10,000 = Central tax Rs.100 + State tax Rs.100
Payment due after TDS under GST provisions = Rs.11,600/- (11,800-200)
|B (registered + contract value is including GST)||He made taxable supply worth Rs.10,000 and exempted supply worth Rs. 20,000 to a local authority where contract for supply is for Rs.5,00,000 (Rs.2,20,000 for taxable supply including GST and Rs.2,30,000 for exempted supply). Consider the GST rate to be 18%.||Here, the local authority makes payment of Rs.10,000 under a contract of Rs.1,86,440 (2,20,000*100/11) which is less than Rs.2.5 lakh. Hence, deduction of tax is not required.|
|C (registered under composition scheme)||He made taxable supply worth Rs.10,000 to a local authority where the value of taxable supply under the contract is for Rs.2, 55,000||Here, the local authority makes payment of Rs.10,000 under a contract of Rs. 2,55,000 (value of taxable supply) which is above Rs.2.5 lakh. Hence, deduction of tax is required.|
The SOP for TDS under GST states that tax is required to be deducted if all the following conditions are satisfied:
|Nature of supply||Name of TDS||Rate of tax|
|Location of the supplier and place of supply is in the same state/UT without any legislature.||CGST
|Location of the supplier and place of supply is in different states.||IGST||2%|
The SOP for TDS under GST further elaborates the cases where TDS under GST need not be deducted.
The SOP for TDS under GST explains the section 24(vi) of the CGST Act, 2017 that provides for mandatory registration for the deductors of TDS. The existing deductors under VAT will not be automatically shifted to GST. Below is the step-by-step process of registration of TDS deductors under GST:
The SOP for TDS under GST provides details about TDS payment under GST. The method of depositing TDS under GST is similar to the one followed under VAT. Under GST, there is a single portal for registration, payment and filing of Returns. The deductor has to generate a challan in the portal at www.gst.gov.in and deposit the tax so deducted through e-payment mode (Net Banking/Debit-Credit card/NEFT-RTGS) or OTC Mode (Cash/Cheque/DD).
The SOP for TDS under GST provides details about GSTR-7 return under GST.
Return & time limit: Every registered TDS deductor is required to file a return in FORM GSTR-7 electronically within the 10th of the month succeeding the month in which deductions have been made. It can be filed through online or offline mode. For deductions made on or after 1st October 2018 but before the date of registration, shall be included in the first return to be furnished after obtaining registration.
Payment by challan: Tax deposited by challan would get credited in the electronic cash ledger of the deductor. The deductor is required to pay his liability by debiting his electronic cash ledger.
Issuance of certificate: The deductor is required to provide a system generated certificate to the deductee in FORM GSTR-7A mentioning the contract value, rate of deduction, the amount deducted, the amount paid to the government, etc. This certificate should be provided within five days of crediting the amount so deducted to the government, i.e. within five days of filing a return in FORM GSTR-7.
Credit claim by deductee: With the submission of Form GSTR-7, the amount deducted will be available in Form GSTR-2A/4A of the registered deductee and the same will get reflected in the electronic cash ledger. The deductee can utilise this amount for discharging his tax liabilities.
There are two cases which attract late fees under TDS, states the SOP for TDS under GST, as follows:
Under both the cases, the late fee is subject to a maximum of Rs.5,000 each under the CGST Act and SGST/UTGST Act.