30th July 2017
Tax deducted at the source is the provision by which tax is collected from the source where the income gets generated. It is the tax liability of the recipient of goods and services which he disposes of at the time of making payment to the supplier. It facilitates the collection of tax at the time it is generated rather than the later date which helps to minimize the tax evasion and increase the tax base. Provision of tax deducted at source is similar under the GST regime and Income Tax Act to a great extent.
Taxpayer Liable to Deduct TDS
Every taxpayer is not required to deduct tax at source. Only the below-mentioned taxpayers are required to deduct tax at source:
• Department or establishment of the Central or State Government, or
• Local authority, or
• Governmental agencies, or
• Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the GST Council
TDS Rate Under GST
When the total value of a supply under the contract exceeds Rs 2.5 lakhs the liability to deduct tax at source arises. The taxpayer is required to deduct tax at the rate of 1% under CGST and 1% under SGST. In calculating the taxable value of service the applicable amount of IGST, SGST, CESS shall not be taken into consideration.
Also, if the location of supplier and the location of supply of services are not same then there is no requirement to deduct tax at source.
Further, the deductor of the TDS is required to pay the amount deducted as the tax within 10 days after the end of the month in which such deduction is made.
Process for getting registered as TDS Deductor
Any person who wishes to get registered as tax deductor can apply online through the prescribed application by accessing the Goods and Services Tax system.
The documents required for getting registered as Tax Deductor include:
• Valid PAN or TAN.
• Valid mobile number.
• Valid E-mail ID.
• Prescribed documents and information on all mandatory fields as required for registration.
• There must be a place of business of the applicant.
• There must be an authorized signatory of the applicant with the valid details.
The registration application submitted will then be processed and approved by the relevant Tax Officer and a registration certificate will be issued along with GSTIN.
Certificate of TDS under GST
Every tax deductor is required to furnish a certificate to the deductee in FORM GSTR-7 1 after deducting the TDS within five days of crediting the amount so deducted to the appropriate Government. If the deductor fails to comply with this provision then he will be liable pay, by way of a late fee, a sum of Rs. 100/- per day from the day after the expiry of the five-day period until the failure is rectified. The total penalty charged shall not exceed Rs 5000.
The certificate furnished shall contain the following details-
1. The contract value
2. The rate of deduction
3. The amount deduction
4. An amount paid to the appropriate government
5. Such particulars as may be prescribed.
How to claim Credit of the TDS under GST
To claim the credit of TDS paid the deductor is required to provide the detail of amount of TDS in his return. When deductor pays the amount of TDS, it gets reflected into the credit ledger of the deductee. The deductee shall claim credit, in his electronic credit ledger, of the tax deducted by the deductor.
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