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TDS AND TCS2018-10-03T12:28:35+00:00
  • Adopted from Income tax, TDS and TCS are covered under Sec 51 and 52 of CGST Act, 2017 and are effective from 1st October, 2018 (Noti: 50/51 of 2018 dated 13th September, 2018).

  • This tax is deducted or collected by the payer on the total amount of GST invoice at a certain fixed percentage, as prescribed under law, at the time of making or crediting the payment to the payee.

  • Tax, so deducted or collected, is required to be paid to the Government within a specified time in the name of the payee.

  • The payee gets the credit of this tax amount while determining his final tax liability.

APPLICABILITY

— TDS

As per Sec. 51(1) of the CGST Act, 2017 read with Notification No. 50/2018 – Central Tax dated 13th September, 2018, following persons shall deduct TDS:

  • An authority or board or any other body

    • Set up by act of Parliament or State Legislature

    • Established by any Government with 51% or more participation by way of equity control to carry out any function

  • Society established by Central Government or State Government or Local Authority under Societies Registration Act

  • Public Sector Undertakings (PSU)

— TCS

  • Every electronic commerce operator, not being an agent.

ELIGIBILITY AND RATE OF DEDUCTION

— TDS

The person making a payment shall deduct TDS where total value of supply of goods or services or both is more than 2.5 lakhs for a particular transaction or contract. For multiple contracts, the payments for each shall be considered separately while determining the total value of supplies. The deductor is bound to deduct tax irrespective of whether the supplier is registered under GST or not.

The limit of Rs 2.5 lakhs is calculated excluding the value of taxes (CGST, SGST/UTGST, IGST).

Deduction shall be made @2% (1% CGST + 1% SGST/UTGST or 2% IGST)

— TCS

It will apply to all net value of taxable supplies made through an e-commerce operator by other suppliers where the consideration with respect to such supplies is to be collected by the operator.

Tax will be collected @1% (.5% CGST + .5% SGST/UTGST or 1% IGST)

TDS EXCEPTIONS

  • No TDS on Exempted supplies

  • If location of supplier and the place of supply is in a State or Union territory which is different from the State/ Union territory of registration of the recipient. Eg: Company A is supplying goods to Company B where Company A is located in Delhi and place of supply is also Delhi but the invoice is raised to Company B at its GST registered office in Maharashtra. No TDS would be deducted

PAYMENT OF TDS/TCS AND TDS CERTIFICATE

— TDS

  • Sec 51(2) of the CGST Act, 2017 clearly states that the deductor shall pay the TDS amount to the Government within ten days after the end of month in which deduction is made.

  • As per Sec 51(3) and 51(4) of the CGST Act, 2017, the deductor shall furnish to the deductee a TDS certificate in Form GSTR 7A within five days of crediting the amount to the Government.

  • TDS certificate shall have clear mention of all the details like contract value, rate of deduction, amount deducted, amount paid to Government and such other particulars as prescribed under law.

  • Deductee shall claim credit of tax deducted, in his electronic cash ledger. The flow of credit should be done automatically basis return filed by deductor.

— TCS

  • Sec 52(3) of the CGST Act, 2017 clearly states that the TCS amount shall be paid to the Government within ten days after the end of month in which it was collected.

  • The supplier shall claim the credit of tax, in his electronic cash ledger. The flow of credit should be done automatically basis return filed by collector of tax.

  • Please not that unlike under TDS, no certificate regarding tax collected at source will be provided to the person from whom the tax has been so collected.

COMPLIANCES

As per Sec 24 of the CGST Act, 2017 every person, who is required to deduct and collect tax, shall obtain registration irrespective of the fact that whether such person is separately registered under the Act.

Form GST REG-07 needs to be filed for obtaining registration as deductor or collector of tax. A registration certificate in Form REG-06 is obtained after acceptance of registration.

For TDS purposes, every deductor shall file a return in Form GSTR 7 electronically by 10th of the following month.

For TCS purposes, every operator who collects tax at source shall file a monthly return n Form GSTR-8 electronically by 10th of the following month and an annual statement under Section 52(5) of the CGST Act,2017 regarding outward supplies of Goods and Services and return of goods and services during the Financial Year, before 31st December following the end of such financial year.

RECTIFICATION OF ERRORS UNDER TCS

As per Sec 52(6) of the CGST Act, 2017 if any operator, after furnishing Form GSTR 8, discovers any errors or omission on his own, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities then he shall rectify the same in the statement of month of such discovery, subject to payment of interest.

No such rectification shall be allowed:

  • After the due date for furnishing of statement for the month of September following the end of the financial year;

  • The actual date of furnishing of the relevant annual statement,

    whichever is earlier.

CROSS MATCHING OF DATA UNDER TCS

  • The details of supplies furnished by every operator in Form GSTR 8 shall be matched with the corresponding details of outward supplies furnished by the concerned supplier basis his returns filed.

  • Where the details of outward supplies furnished by the operator do not match with the corresponding details furnished by the supplier, the discrepancy shall be communicated to both persons.

  • Where the discrepancy remains unrectified either by the supplier or the operator, the amount shall be added to the output tax liability of the said supplier and shall be paid by him along with interest.

INTEREST AND PENALTY FOR NON-COMPLIANCE

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