12 Nov 2018Posted By: Mudit Handa

What is the Procedure and Criteria of TDS under GST?

With the sole aim of upgrading and enhancing the GST tax structure and combating the tax evasion malice, the GST department had decided to revive the provisions of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) through a notification, with effect from 1st October 2018.

While the provisions of TCS under GST were made effective from 20th September 2018 by the Central Board of Indirect Taxes and Customs (CBIC), the TDS mechanism was enacted under the GST from 1st October 2018.

Before discussing the procedure of tax deduction under GST, we must know about the concept of TDS under GST.


#1. What is the provision of TDS under GST?

The provisions for Tax Deduction at Source have been discussed u/s 51 of the CGST Act-2017.

As per section 51 of the CGST Act,

If the total value of the supplies under a contract is more than ₹2.5 lakhs, the tax shall be deducted @1% as CGST and 1% as SGST from the total value of the said taxable goods or services or both credited to the supplier or the ‘deductee’ having the GST registration.


#2. What is the procedure of TDS under GST?

There are specific parties that are designated to deduct TDS under GST. as a matter of fact, there are separate regulations of GST registration as well as GST return filing procedure for TDS deductors.

Know about the criteria for being a TDS deductor under GST.

Given below is the complete procedure of Tax Deduction at Source under GST-

  • Step 1: TDS Deduction

GST tax is deducted while crediting payment to the supplier. As discussed above, TDS is deducted @ 2% as IGST in case of interstate supply and in case of intrastate supply, TDS is deducted @ 1% as SGST and 1% as CGST.


  • Step 2: TDS payment to the government

Upon deduction, the TDS is supposed to be paid to the government within 10 days of the month end during which such TDS Deduction was done.


  • Step 3: TDS return filing

The concerned party that deducts tax under GST is now supposed to fulfil a separate GST return filing procedure. The Tax Deductors under GST is needed to file a TDS return under GST, which is referred to as FORM GSTR-7.

This GST return filing has to be completed and submitted within 10 days from the end of the month in which such GST deduction was made.


  • Step 4: TDS certificate

A TDS Deductor under GST is now supposed to furnish a system generated TDS certificate in the form of FORM GSTR-7A to the deductee within 5 days from the date when the amount of TDS under GST was credited to the government, i.e. when the GSTR-7 was filed.


#3. What if TDS deduction under GST is not timely credited?

The provisions of the penalty in case of late TDS deduction are given u/s 50(1) and 51(6) of the CGST Act-2017. In case of default in TDS deposit under GST, i.e. if the if the amount of the TDS deduction under GST is not timely credited to the government, an interest @18% per annum shall be chargeable on the Tax Deductor.


#4. What if the TDS return under GST not timely filed?

In case of late GST return filing for TDS deduction under GST, a late @ ₹100/- per day shall be applied separately as under CGST Act and SGST Act, which may be extended up to ₹5,000/-.


#5. What if the TDS certificate is not timely furnished?

In case of late furnishing of FORM GSTR-7A, i.e. TDS certificate under GST a Late fee @ ₹100/- per day shall be chargeable, from the day after the expiry of the 5 days period until such failure is resolved. The late fee shall be extended up to ₹5,000/-.


#6. What if an excess amount of TDS is deducted under GST?

In case an excess amount of TDS is deducted under GST, the TDS deductor or the deductee may claim the refund of the excess TDS amount deducted.

However, if excess TDS is credited to the deductee, the deductor can’t claim the TDS refund.


If you need any sort of assistance regarding GST registration or GST return filing procedure, feel free to contact our business advisor at 8881-069-069.

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