Last updated on 31st March, 2017 in line with latest amendments with respect to tax deducted at source i.e TDS under GST.
In addition, as per the model GST law, certain categories of registered persons will be required to deduct taxes while making payments to supplier i.e TDS and deposit it with the government. Let’s try to understand TDS related procedures under the revised law.
TDS is to be deducted at the rate of 1 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds two lakh fifty thousand rupees.
No tax deduction required where the location of supplier and place of supply is different from the State of the registration of the recipient.
As per GST law following people/entities need to deduct TDS:
Value of supply on which TDS shall be deducted:
For purpose of deduction of TDS, the value of supply is to be taken as the amount excluding the tax indicated in the invoice. This means TDS shall not be deducted on the CGST, SGST or IGST component of invoice.
To whom would you pay the TDS?
TDS shall be paid within 10 days from the end of the month in which tax is deducted. The payment shall be made to the appropriate government which means:
Further, deductors need to follow these listed procedural compliances:
How can the deductee claim benefit of TDS?
The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of section 34, in the manner prescribed. Any amount deducted as TDS and reported in GSTR – 7 will automatically reflect in electronic cash ledger.
Refund of the excess amount deducted:
Refund to deductor is not possible such case. However, deductee can claim a refund of tax subject to refund provisions of the act. Practically it is not possible to claim any erroneous deduction of TDS by the deductor.
Refund of erroneous excess TDS deducted is possible to deductor, subject to refund provision and procedure of the act.
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