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TDS & TCS Under GST

Under the GST regime, Section 51 and 52 of the CGST act, 2017 prescribes the authority and procedure for ‘Tax deduction at source’ and ‘ Tax Collection at Source’.

Registration

TDS: A TDS deductor has to compulsorily register without any threshold limit. The deductor has a privilege of obtaining registration under GST without PAN. He can obtain registration using his TAN (Tax deduction and collection account number).

TCS: The E-Commerce operator, as well as supplier supplying goods or services through an operator needs to compulsorily register under GST. The threshold limit is not applicable to them

Persons required to deduct TDS (Deductors) and collect TCS (Collectors)

TDS: The TDS provisions empower the central government to make it mandatory for the following persons to deduct tax at source from payments made to supplier of taxable goods or services.

  1. Central/State government department or establishment
  2. Local Authority
  3. Governmental Agencies
  4. Notified persons /category of persons

TCS: Every Electronic Commerce Operator (ECO), not being an agent has been mandated to collect TCS on the net value of taxable supplies made through it by other suppliers, whenever the ECO collects the consideration on behalf of the supplier

Persons on whose payment TDS /TCS is deducted / collected (Deductees)

TDS: The Deductees are the suppliers whose total value of supply of taxable goods and/or services under a contract exceeds Rs 250000 exclusive of tax & cess as per invoice

TCS: The Deductees are the suppliers who are the supplying the goods or services through Electronic Commerce Operator

Deposit of TDS /TCS with the government

The amount of TDS /TCS deducted at source should be deposited to the government account by deductor by 10th of succeeding month.

TDS Certificate

A TDS certificate is required to be issued by deductor in prescribed form within 5 days of remittance to the Government to the deductee (the supplier on whose payment TDS is deducted)

TDS /TCS Return

TDS: The deductor is required to furnish the return in GSTR 7 within 10 days from the end of the month. If the supplier is unregistered, the name of the supplier rather than GSTIN should be mentioned.

TCS: The Electronic commerce operator is required to furnish the return in GSTR 8 with in 10days from the end of the month.

TDS & TCS Under GST FAQs

1.Do I need to file GSTR 7 even if no TDS is deducted in the tax period?

It is not mandatory to file nil return in such case.

2.Do I need to file GSTR 8 even if no tax is collected in the tax period?

Filing of GSTR 8 is not mandatory for every tax period. Every ECO (electronic Commerce Operator) is required to file GSTR 8 for the tax period in which it has collected TCS

3.What happens if the deductor has not furnished the TDS certificate?

If the deductor does not furnish the certificate of deduction cum remittance within 5 days of remittance, the deductor is liable to pay the prescribed late fee.

4.What happens if deductor does not remit the TDS?

If the deductor has not remitted the TDS amount to the government within a prescribed limit, he is liable to pay penal interest u/s 50 at the rate of 18% p.a

5.Can the deductor/ deductee can claim a refund on excess deduction of TDS?

The deductor or deductee can claim a refund of excess deduction or erroneous deduction. The provisions of sec 54 relating to refunds will apply. However, if the deducted amount is already credited to Electronic Cash ledger of the supplier, the same shall not be refunded.

6.Can the supplier can claim the credit of TCS Collected by Electronic Commerce Operator?

Yes, Supplier can claim the credit of TCS amount in his electronic cash ledger. This amount should be reflected in the monthly statement filed by ECO.

7.What is the rate of TDS and rate of TCS?

The rate of TDS prescribed is 2%, and rate of TCS prescribed is 1% by the government

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