05 Oct 2018Posted By: Mudit Handa

All you need to know about TDS Provisions under GST

In an effort to upgrade the GST tax structure and counter tax evasion, the GST council had decided to reintroduce the provisions of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) with effect from 1st October 2018.

The provision of TCS under GST was implemented on 20th September 2018 by the Central Board of Indirect Taxes and Customs (CBIC).

Very importantly, the government has now brought into effect the TDS mechanism under the GST from 1st October 2018.


#1. When did the Government decide to bring back TDS & TCS under GST?

The Central Government on 13th of September 2018 had declared that the laws related to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) u/s 51 & 52 of CGST Act-2017 respectively, shall be brought into effect from 1st of October 2018.

  • The government had phased in the TCS mechanism with effect from 20th September 2018.
  • The TDS mechanism has been brought into effect since 1st October 2018 by the Finance Ministry vide the Notification 33/2017 under the head Central Tax.

#2. What is the provision of TDS under GST?

The mechanism for Tax Deduction at Source has been explained u/s 51 of the CGST Act-2017.

As per the section-

If the total value of such supplies under a contract, exceed ₹2.5 lakh, the tax shall be deducted @1% as CGST and 1% as SGST from the total payment of the taxable goods or services or both credited to the supplier or the ‘deductee’ who has the GST registration.


#3. Who is authorised to deduct tax at source under GST?

As per the section 51 of the CGST Act-2017, following parties are authorised to deduct tax at source under GST:

  1. Any authority or a board or any other kind of body, which is
  • Formed by an Act of Parliament or a State Legislature; or
  • Has been established by Central or State Government, with its 51% or more stake through equity or control of operations;
  1. A Society established by the Central or State Government or any Local Authority covered under the Societies Registration Act-1860; or
  2. A Public Sector Undertakings (PSU)

All of the above-mentioned parties are hereby referred to as “Tax Deductors”.

#4. What is the requirement of GST registration for Tax Deductors?

Any of the bodies discussed above that are liable to deduct TDS under GST, is supposed to get a separate GST registration as a Tax Deductor’. For this, he needs to fill the FORM GST-REG 7.


#5. Where is the provision of TDS applicable under GST?

As per the CGST Act 2017, the provision of TDS is made for all the specified entities with GST registration that supply goods & services worth ₹2.5 lakh or above.

#6. What is the Time limit to deposit TDS under GST?

A TDS Deductor under GST is required to deposit the GST tax deducted by him within 10 days following the closing of the month in which the GST was deducted by him.


#7. What is the requirement of GST return filing for the Tax Deductors?

  • The party authorised to deduct tax under GST, i.e. the Tax Deductor is required to follow a separate GST return filing procedure. All the specified Tax Deductors under GST are supposed to file a separate TDS return under GST, i.e the FORM GSTR-7.
  • This GST return filing has to be done within 10 days from the closing of the month in which the GST was deducted.


#8. What if TDS under GST not timely deducted?

In case of default in TDS deposit under GST, an interest shall be chargeable @18% p.a. on the Tax Deductor.


#9. How and when the TDS certificate is to be issued under GST?

A TDS Deductor under GST is also supposed to issue a TDS certificate within 5 days from the date when the amount of TDS under GST was credited. This TDS certificate is to be submitted to the Government with the following details mentioned clearly:

  1. The contract value,
  2. The rate of TDS deduction,
  3. The total amount of TDS deducted,
  4. The total amount of tax paid to the Government; and
  5. Other details as may be required


#10. What is the Late fee for non-issuance of TDS certificate?

In case of failure to issue the TDS certificate under GST, a Late fee @ ₹100/- per day will be applicable, from the day after the expiry of the 5 days period until such failure is rectified. The maximum amount of late fee is ₹5,000/-.


If you require any other assistance regarding GST registration or GST return filing process, feel free to contact us at 8881-069-069.

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