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It may be noted that as per the initial notification issued by the government on 26th June 2017, the provisions of TDS and TCS under GST were put on hold and it was communicated that the same will come into force at a later date.
However, the GST Council, at its 21st meeting in Hyderabad, decided to open registration of persons liable to deduct TDS and TCS under GST from 18th September. However, the date from which TDS and TCS under GST will be deducted or collected will be notified by the Council later, as per the latest tax provisions under GST.
TDS under GST law, is to be deducted at the rate of 1% on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds INR 2,50,000. However, it is to be noted that no tax deduction is required where the location of supplier and place of supply is different from the State where the recipient is registered.
For the purpose of tax deducted at source under GST, the value of supply is to be taken as the amount excluding the tax indicated in the invoice. This means TDS shall not be deducted on the CGST, SGST/UTGST or IGST component of the invoice.
As per the GST law, the following people/entities need to deduct TDS:
The registration application for a TDS Deductor can be filed electronically by submitting a duly signed application in the Form GST REG 07. In the place of PAN, such persons will indicate their TAN in the registration application. Obtaining TAN (Tax Deduction Account Number) issued under income tax act is mandatory.
The registration application of the applicant will then be processed and approved by the relevant tax officer, post which the registration certificate containing the number, will be issued.
The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the returns of the deductor. Any amount deducted as TDS and reported in GSTR 7 will automatically reflect in the electronic cash ledger.
Refund to the deductor is not possible in such a case. However, deductee can claim a refund of tax subject to refund provisions of the Act. Practically it is not possible to claim any erroneous deduction of TDS by the deductor.
Refund of the erroneous excess TDS deducted is possible to the deductor, subject to the refund provisions and procedure of the Act.
Any dealer / trader selling goods or services online will get the payment after deduction of 2% TCS.
Under GST, the main TCS deductors are the e-commerce aggregators, who are made responsible for deducting and depositing TCS at the rate of 2% from each of the transaction.
The tax collected by the operator shall be credited to the electronic cash ledger of the supplier who has supplied the goods/services through the operator. The supplier can claim credit of the tax collected and reflected in the return by the operator in the supplier’s electronic cash ledger.
The details of the supplies, including the value of supplies, submitted by every operator in the statements will be matched with the details of supplies submitted by all such suppliers in their returns. If there is any discrepancy in the value of supplies, the same would be communicated to both of them. If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such a suppler. The supplier will have to pay the differential amount of output tax along with interest.
Payment Declaration Form – GST PMT – 08: Definition, Format and Rules