TDS under GST are introduced in order to regulate unorganized sectors in the market. We are providing all the information related to the procedure and criteria for TDS under GST.

It may be noted that as per the notification issued by the government on 26th June 2017, the provisions of TDS has been put on hold and it will come into force from a date which will be communicated later.

Deductor of TDS under GST

(a) Department or establishment of the Central or State Government, or

(b) Local authority, or

(c) Governmental agencies, or

(d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council.

Rate of TDS under GST

For intra-state supply, the deductor is required to deduct tax at the rate of 2% (CGST 1% + SGST 1%). And in the case of interstate supplies, 2% (IGST) from the payment made or credited to the supplier of taxable goods and/or services.

Value of supply for TDS under GST

The deductor is required to deduct tax where the total value of supply under a contract exceeds INR 2.5 Lakhs. For the purpose of deduction of tax, the value of supply shall be taken as the amount excluding the tax indicated on the invoice.

Time-limit for payment

The deductor shall be required to pay the amount deducted as the tax within 10 days after the end of the month in which such deduction is made. It shall be paid to the Central Government for CGST/IGST and State Government for SGST.

Procedure for getting registered as Deductor

The registration application for Tax Deductor can be filed electronically by submitting a duly signed application in 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 documents required while getting registered as Tax Deductor include:

  • Applicant has valid TAN.
  • Applicant must have a valid mobile number.
  • Applicant must have valid E-mail ID.
  • Applicant must have the 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 authorised signatory of the applicant with the valid details.

The registration application of the applicant will then be processed and approved by the relevant Tax Officer after which he will be issued the registration certificate containing the number.

Certificate to the Deductee

Deductor shall be required to furnish to the deductee a certificate mentioning therein:

  1. the contract value,
  2. the rate of deduction,
  3. the amount deducted,
  4. an amount paid to the appropriate Government and
  5. such particulars as may be prescribed in this behalf.

Time limit to furnish such certificate and penalty thereof of TDS under GST

If any deductor fails to furnish to the deductee the certificate, after deducting the TDS within five days of crediting the amount so deducted to the appropriate Government, the deductor shall be liable to pay, by way of a late fee, a sum of INR 100 per day from the day after the expiry of the five-day period until the failure is rectified. Provided that the amount of late fee shall not exceed INR 5,000.


Certificate of TDS under GST

GSTR 7A: Tax deduction certificate


Claiming of credit of TDS under GST

Deductor is required to file the return and has to provide the detail of amount of TDS in his return. When deductor pays the amount of TDS, it shall get reflected into the GST credit ledger of the deductee. The deductee shall claim credit, in his electronic cash ledger, of the tax deducted by the deductor.

Interest liability on deductor

If any deductor fails to pay the amount of TDS to the credit of the appropriate Government, he shall be liable to pay interest in accordance with the provisions of section 36, in addition to the amount of TDS.

In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.