It should be recalled that the provisions of TDS and TCS under GST were put on hold in the initial notification published by the government on June 26, 2017, and it was indicated that they would come into effect at a later date.
Also Read: TDS Return Filing
The GST Council, however, resolved at its 21st meeting in Hyderabad to open registration of persons liable to deduct TDS and TCS under GST on September 18th. According to the latest GST tax laws. The date from which TDS and TCS would be deducted or collected shall be notified by the Council later.
TDS in the context of GST
What is the TDS rate under the GST?
TDS is deducted at a rate of 1% on payments made to suppliers of taxable goods and/or services when the entire value of such supply, under an individual contract, exceeds INR 2,50,000, as per GST law. It should be noted, however, that no tax deduction is necessary if the supplier’s and supplier’s locations are not the same as the recipient’s registered state.
What is the maximum amount of TDS that can be deducted under GST?
The value of supply is to be taken as the amount excluding the tax mentioned in the invoice for the purpose of tax deducted at source under GST. This indicates that TDS will not be deducted from the invoice’s CGST, SGST/UTGST, or IGST components.
Who needs to deduct TDS under GST?
The following people/entities are required to deduct TDS under the GST law:
- A federal or state government agency or organisation.
- Local Authority
- Governmental Agencies
- Persons or categories of persons as may be notified by the Central or State Governments in response to the Council’s recommendations
How do I become a TDS Deductor under the GST?
TDS Deductor registration can be applied for electronically by submitting a duly signed application in Form GST REG 07. In the registration application, such individuals will include their TAN instead of their PAN. It is necessary to obtain a TAN (Tax Deduction Account Number) issued under the Income Tax Act.
The competent tax official will then process and approve the applicant’s registration application. After which the registration certificate with the number will be issued.
How does a deductee get TDS benefits under GST?
The deductee must claim credit for the tax deducted and recorded in the deductor’s returns in his electronic cash ledger. Any TDS deducted and reported in GSTR 7 will be reflected automatically in the electronic cash ledger.
If the money is claimed in the electronic cash ledger by the deductee
In this instance, a refund to the deductor is not possible. However, pursuant to the Act’s refund provisions, a deductee can seek a tax refund. It is practically impossible to claim any incorrect TDS deduction by the deductor.
If the deductee does not claim the money
The deductor may be entitled to a refund of the erroneously deducted excess TDS, subject to the Act’s refund rules and procedures.
TCS in the context of GST
What is the TCS rate under the GST?
Any dealer or trader selling products or services online will be paid after a 2% TCS deduction.
Under GST, who is required to deduct TCS?
E-commerce aggregators are the primary TCS deductors under GST. And they are responsible for deducting and depositing TCS at a rate of 2% from each transaction.
How does a supplier claim TCS benefits under GST?
The tax received by the operator will be credited to the supplier’s electronic cash ledger for goods/services provided through the operator. The supplier can claim credit for the tax collected and shown in the operator’s return in the electronic cash ledger of the supplier.
In the event of a difference, who is responsible for paying the additional production TCS under GST?
The details of supplies supplied by each operator in the statements, including the value of supplies, will be matched with the details of supplies submitted by all such suppliers in their returns. If there is a variation in the cost of supplies, it will be conveyed to them both. If the value disparity is not corrected within the specified time. The amount will be added to the supplier’s output tax due. The provider will be required to pay the difference in production tax, as well as interest.