Tds Under GST Regime - Section 51 of CGST Act: Cma Utpal Kumar Saha
Tds Under GST Regime - Section 51 of CGST Act: Cma Utpal Kumar Saha
51 OF CGST ACT
CMA UTPAL KUMAR SAHA
AGM – Indirect Tax, McNally Bharat Engineering Co. Ltd.
W e know about TDS under Income Tax Act, 1961 and the relevant penalties thereon for non-compliance. There is no
concept of TDS in Central Excise Act 1944 even the erstwhile service tax law. However, under Value Added Tax
law, there was a concept of TDS but it was limited to works contract activity only where transfer of property in
goods involved in execution of works contract. The contractee was required to deduct WC-TDS at the time of making
payment to the contractor and issue necessary certificates thereon. The rates of WC-TDS were varied from state to state, like
2%, 5%,8% etc.
Three GST Bills have been passed and became the law of the land. Section 51 of CGST Act makes provision with respect to
deduction of tax at source (TDS)by certain category of persons. Here, we are summarizing the relevant provisions of TDS in
the form of FAQ and also highlighting the mechanism to minimize the risk of non-compliances thereon in the business.
The first three category of persons are already specific in nature to deduct TDS. However, Government may on the
recommendation of council notify other categories of persons also for the purpose of expanding the coverage of
TDS.
However, Government has further notified the following persons to deduct TDS vide its notification 50/2018 –
Central Tax dated 13th September, 2018.
3. Rate of TDS?
Tax will be deducted at the rate of 1% each for CGST and SGST from payment made or credited to the supplier. In
case of IGST it would be 2%.
However, as per FAQ released by CBEC, TDS will be deducted at the time of making payment to the supplier.
Q23. …………. While making any payments under such contracts, the concerned Government/authority shall deduct 1%
of the total payment made and remit it into the appropriate GST account.
However, FAQ has no legal interpretation. Request Government to clarify the time of deduction in more specific manner
in order to avoid litigation.
9. Explain the first proviso of section 51(1) with respect to non-applicability of TDS-
Where the location of supplier and place of supply both are in same state but place of recipient of supply is another state,
no TDS shall be deductible. Explant the same through a tabular form-
14. What is the quantum of penalty for failure of deduction of TDS or short deduction of TDS or failure to pay TDS
to the Government?
There shall be levied a penalty of Rs. 10,000/- or an amount equivalent to tax not deducted or tax shortly deducted or
collected/ shortly collected but not deposit to the Government , whichever is higher. [Section 122(v)]
18. Can the deductor claimed refund in case the deductor has deposited excess TDS amount?
Yes, he can claim refund and shall be dealt with the provision of section 54.
Example: XYZ has receipts goods amounting to Rs. 1,00,000/- (Basic value of goods) from M/s ABC. XYZ has wrongly
deposit TDS amount Rs. 4,000/- instead of Rs. 2,000/-. He can claim such excess deposit amount except when it has been
credited to the electronic cash ledger of the deductee.