TDS under GST applicability- A Complete Guide

GST TDS Applicability

TDS under GST applicability has been specified in section 51 of CGST Act, 2017. It is mandatory for the specified government bodies with effect from 1st October 2018, provided contract value of goods or services exceeds Rs. 2,50,000. (Read with notification No. 33/2017 “ Central Tax dated 15.09.2017 & Notification No. 50/2018-Central Tax dated 13.09.2018)

Extracts of the provisions of the GST act with respect to GST TDS applicability, rates, procedural compliance, and penalties are summarised below with examples for easy understanding. 

Page Contents

• Applicability
  • To advances & Part payments
  • To Composition Scheme dealers
• Who is liable to deduct
• Rate of GST TDS
• Valuation
• When GST TDS is not applicable
• Procedural Compliance
  • Due date for remittance & filing
  • Due date for furnishing the certificate
• Penalties for non-compliance

Applicability of GST TDS

GST TDS is applicable to the payments made by specified government agencies (either as advance or as settlement) to the vendors, for the supply of taxable goods or services or both provided by them, if such value exceeds Rs. 2,50,000 per contract (excluding GST, other duties and taxes).

For example, “A Ltd” of Maharashtra has supplied goods worth Rs. 10,00,000 (plus GST @18%) to “B Ltd” (a Govt. agency) in Maharashtra on 8.11.2018. The total contract value is Rs. 10,00,000 plus GST @18%.

In this case, the transaction is covered under GST TDS as the contract value is exceeding Rs. 2,50,000. And both the parties are in the same state, so CGST @1% and SGST @1% is applicable. Value to be considered is Rs. 10,00,000 excluding GST.

CGST TDS is Rs. 10,000

SGST TDS is Rs. 10,000

Deduction in case of part payments & advances:

GST TDS is also applicable on part payments and advances payable to the suppliers. Applicability arises when the value of the contract exceeds the limit mentioned i.e. Rs. 2,50,000. But, the TDS rate should be applied on the amount payable to the vendor as advance or part payment.

Composition Scheme:

These provisions are also applicable for suppliers registered under the Composition scheme if they supply any taxable goods or services to a specified government body whose contract value is more than Rs. 2,50,000.

Who is liable to deduct GST TDS

It is only applicable to the government bodies specified below:

(a) a department or establishment of the Central Government or State Government; or

(c) Governmental agencies; or

(d) an authority or a board or any other body

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government, with fifty-one percent. or more participation by way of equity or control, to carry out any function; or

(e) a society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of1860); or

(f) public sector undertakings.

Rate of GST TDS

For inter-state supply – IGST @ 2% on the amount payable to the supplier (Inter-state supply means where the place of supply is DIFFERENT from the registered state of the supplier)

For intra-state supply – CGST @1% & SGST @1% on the amount payable to the supplier (Intra-state supply means where the place of supply is the SAME as the registered state of the supplier)   

Valuation

For computation of GST-TDS all taxes i.e. CGST, SGST, IGST & Cess are to be EXCLUDED from the value of supply.

When GST TDS is NOT applicable

• If the value of the supply (supply includes the supply of goods or services or both) does not exceed Rs. 2,50,000 under a contract.
• In the case of Composite contracts (i.e. supply consists of both goods & services) –  Value of contract exceeds Rs. 2,50,000 for supply of TAXABLE goods & EXEMPTED services, but the TAXABLE value of goods under the said contract is less than or equal to Rs. 2,50,000.
• Payment against exempted goods or services (where NO GST charged in the invoice by the vendor)
• Payment against goods for which GST is not applicable i.e. Petrol, diesel, petroleum crude, natural gas, aviation turbine fuel and alcohol for human consumption.
• If the location of the supplier and the place of supply is in the same State which is different from the State of registration of the recipient.

For example: Supplier as well as the place of supply are in State A and the recipient is in State B. The supply would be intra-State supply. In such a case, TDS would not be deducted.

• Any payment related to an invoice issued before 1.10.2018
• All activities or transactions specified in Schedule III of the CGST/SGST Acts 2017, irrespective of the value.
• Where the payment relates to “Cess” component.
• Invoice has been issued to the extent of advance, which was paid before 1.10.2018
• Payment made to an unregistered dealer
• When tax is to be paid on reverse charge mechanism basis

Procedural Compliance

Due date for remission of tax & filing of Form GSTR-7:

Tax remittance to the Government & filing of monthly return in Form GSTR-7 is to be completed within 10 days after the end of the month in which tax deduction was made from the GST portal i.e. gst.gov.in. The deductee (i.e. the supplier) shall claim the credit of such deduction in his electronic cash ledger.

Due date for furnishing of TDS certificate to the deductee (i.e. Vendor):

TDS certificate in Form-GSTR 7A is to be furnished to the vendor, within 5 days from the due date of furnishing GSTR-7.

Penalties for non-compliance

Non-deduction of GST TDS (or) deducted but not deposited to the govt account (or) deducted but deposited after the 10th of the following month may lead to levy of both interest and penalty.

And delayed filing of GSTR-7 and GSTR-7A will lead to the following:

• Late filing of GSTR-7 “ Late fee of Rs. 200 per day up to a maximum of Rs. 5,000
• Late filing of GSTR-7A “ Late fee of Rs. 200 per day up to a maximum of Rs. 5,000