In GST, TDS is distinguished from TDS under the Income Tax Act. In other words, they require separate TDS fees, separate returns, and separate TDS certificates. In relation to TDS payments under GST, Section 51 of the CGST Act 2017 lays down rules. The Goods and Services Tax (GST) is a single system of indirect taxation in which a large number of taxes, such as the Excise Duty, the Customs Duty, the Service Tax, and the Value Added Tax ( VAT), are subject to a single roof. However, the revised GST regime also divided the country’s tax structure into three types: CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), and IGST (Integrated Goods and Services Tax). Here you will know more about Tax Deducted At Source (TDS) Under GST – All You Need To Know.
Under GST, TDS is very distinct from TDS under Income Tax. As of 1 October 2018, the terms of the GST TDS have been made applicable (Notification No. 50/2018 dated 13 September 2018). If both the GST and the Income Tax Act cover a transaction, then separate deductions may be made, separate returns may be issued and separate TDS certificates may be issued under the applicable Acts.
Tax Deducted at Source (TDS) is usually one of the methods of collecting tax based entirely on a certain proportion of the amount owed by the receiver to the seller for the purchase of products or services, or both. The earned tax is money for the government. Tax Deducted at Source (TDS) is a tax on goods/services payable to the government by the recipient at a certain percentage of the total. At the time of payment, it is deducted above the sum prescribed under a single contract at a fixed rate and charged to the government.
In this article, we will give you a detailed overview of TDS Under Goods and Services Tax (GST)-All You Need To Know and the process for carrying out TDS-related activities as well.
What Is TDS Under GST?
Tax Deducted at Source (TDS) is typically one of the tax collection strategies and is based exclusively on a certain proportion of the amount owed to the seller by the receiver, or both, for the purchase of goods or services. Paying tax is revenue for the government.
The TDS is very distinct from the Income Tax TDS under GST. The terms of the GST TDS have become applicable as of 1 October 2018 (Notification No. 50/2018 dated 13 September 2018). Where a transaction is protected by both the GST and the Income Tax Act, separate deductions may be made, separate returns may be issued and, under the respective Acts, separate TDS certificates may be issued.
Who Can Deduct TDS Under GST?
- A department or institution of the central government or of the government of the state; or
- Local government; or a local authority
- Agencies of government; or
- Those individuals or groups of persons may be notified by the Government
Who can deduct TDS under GST?
TDS shall be deducted from the tax invoice of such suppliers by recipients of products or services known as deducers who enter into a contract with a supplier for taxable goods or services with a value greater than Rs 2,50 Lakhs.
The taxable quantity of goods or services, with the exception of the GST element, is paid under this TDS for such taxable goods or services. In other words, TDS would be deducted if the individual supplies were maybe lower than Rs 2.50 lakhs, but if the taxable value of the products or services exceeded Rs 2.50 lakhs.
In order to deduct TDS from the tax invoice of the supplier of taxable goods and services, there are also certain requirements that need to be fulfilled. Those are as follows.
When TDS Can Be Deducted?
- Where the total value of the taxable supply is less than or equal to Rs 2.50 Lakhs pursuant to the contract.
- The total contract value for both taxable and exempt supplies exceeds Rs 2,50 lakhs. However, the value of the taxable supply is less than or equal to Rs 2,50 lakhs under such a deal.
- Where, as defined by GST law, exempted services are rendered by the recipient.
- As defined under the GST Law, exempted goods are obtained by the recipient.
- Cases under which an invoice was sent by the supplier/deductee for the sale of the goods for which TDS was to be deducted prior to 1
- July 2017 under the VAT Rule. The payment for such a sale is, however, made on or after 1 July 2017.
TDS Registration Criteria For TDS Deductors
A person or business entity that is responsible for deducting TDS is required to report, which is necessary. However, there may not be a threshold limit for this. Instead of using the current Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act, registration under GST can be carried out without the need for details of the PAN (Permanent Account Number). It can also be argued that getting one’s TAN data is mandatory.