TDS UNDER GST ACT : SECTION 51 OF CGST ACT

Section 51 of the Central Goods and Services Tax (CGST) Act lays down the provisions of Tax deducted at source (TDS). The concept of TDS on GST was initially introduced in the Income Tax Act and has now been introduced in GST as well. The purpose of introduction of TDS on GST is only to enable the govt to have a trail of transactions and to monitor and verify the compliance.

The provisions of the Tds is as follows:

·         Deductor: As per section 51(1) of the CGST Act, deductor will be:

1)      Department or establishment of the Central Government or State Government; or

2)      Local Authority; or

3)      Governmental agencies; or

4)      Such persons or category of persons as may be notified by the Government on the recommendations of the Council.

 

·         Applicability: TDS @ 2% (1% each under SGST AND CGST ACT) is required to be deducted on payment made to the supplier of taxable goods or services of both where the value of such supply under a contract exceeds Rs. 2.5 Lakhs.

·         Computation: following shall be excluded from contract value:

1)      Central GST

2)      State GST

3)      Union Territory GST

4)      Integrated GST

5)      Cess

·         Registration: The deductor have to take a separate registration as deductor even if it is registered as supplier.

 

·         Exemption: The provisions of Tds do not apply in case of Exempt goods and services. TDS on GST would not be applicable if the Location of Recipient is different from the Location of Supplier and the Place of Supply.

 

·         Return: Deductor must file GSTR-7 within 10th of the month succeeding the month in which deduction have made. GSTR-7A is a system generated certificate to be issued by the deductor within 5 days of furnishing GSTR-7.

 

Penal provisions: If the TDS Certificate is not issued within 5 days from the date of deposit with the Govt., the deductor would be liable to pay late fees of Rs. 100/- day. However, the late fees levied should not be more than Rs. 5,000 each under CGST and SGST Act.