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Tax Deduction at Source (TDS) under GST

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Composition Scheme for Service Providers

Advance Tax

Section 51 talks about Tax Deduction at Source provisions where the Central/State Government upon recommendation from the Council, may mandate to

• Deduct tax at 1% from the payment made or credited to the Supplier of goods and/or services

• Where the total value of such supply, under a contract exceeds Rs. 2,50,000

• The value of supply can be considered as the value excluding the tax portion as indicated in the invoice.

• Where the location and the place of supply of the supplier is different from the State or Union Territory of registration of the recipient, no Tax is to be deducted.

The other normal provisions as applicable to a TDS are applicable under the provisions of GST also:

• The amount so deducted shall be paid to the Government by the deductor within 10 days after the end of the month in which such deduction is made.

• The deductor shall issue a certificate to the deductee in the prescribed manner.

• If The Certificate is not furnished to the deductee within 5 days from the date of payment to the Government, the deductor shall be liable to pay a late fee of Rs. 100 per day beyond 5 days, upto a maximum of Rs.500.

• The deductee is entitled to claim the credit of the tax deducted and reflected by the deductor in the return furnished.

• Non remittance of TDS so collected to the Government  would attract interest and penal provisions.

• Any excess or erroneous deduction and its related refunds would be dealt with under section 54. However once the deducted amount is reflected in the Electronic cash ledger of the deductee, no such refunds would be entertained.

• Where the Supplier has made the sale of goods, in respect of which tax was required to be deducted at source under earlier law and has also issued the invoice before the appointed day, and the payment is made to the supplier on or after the appointed day, TDS provisions under Section 51 will not apply.