TDS- Tax Deducted at Source is a method that was introduced under the GST by the government to collect the tax at the place where the income is produced. This is considered as a tool to minimize tax evasion by collecting the tax where it is generated. This applies to various forms of salaries such as commission, interest, dividends. It does not apply to all incomes and transactions. To educate you about TDS, the best GST consultant in Chennai is here.
TDS under GST
As mentioned earlier, it is a method where a part of the amount is deducted by the recipient while processing the payment towards the supplier. The collected tax is meant for the government in form of revenue.
Liable persons to deduct TDS on GST
Let us know the classified persons who are all liable to deduct TDS under GST. This will be deducted from the payment or credit towards the supplier if the value of the transaction is more than Rs. 2.5 Lakhs.
1. Concerned department established by the Centre or the State government.
2. Authority in the Local.
3. Agencies run or handled by the government.
4. Notified persons from the government.
The notified persons by the government on which TDS under GST will be applicable
1. A board or authority or a body whose participation is 51% or more in the share which has been set by the state legislature or parliament or government.
2. An established society by the centre or state government. The local authority can also establish a society under the regulations act of 1860.
3. Public sector undertakings.
TDS applies to the persons who are mentioned above.
TDS is not required for the following cases
Tax consultant in Chennai explains about certain cases where TDS is not applicable
1. TDS does not apply to contracts whose value is less than Rs.2.5 lakhs.
For instance: if a person is undertaking two contracts worth 3 lakhs, 1.5 lakhs each. He is does not apply to deduct TDS under GST.
For TDS, individual contract values are only considered, not the total value of all the contracts.
2. Location of supplier and recipient
If the supplier and the recipient belong to different locations TDS under GST would not apply for this case. But, if the supplier is registered in a place and doing service in a different location where the recipient is. Then he is liable to deduct TDS under GST.
Registration for TDS
There is no need for PAN to obtain registration of TDS under GST, instead of PAN, TAN can be used for the registration. A deductor must register under TDS without any threshold limit. If the TDS is not deducted, the interest amount of TDS along with the TDS amount otherwise the person will face the consequences by the government.
The deductor has to file GSTR-7 and deposit the TDS under GST to the government after the 10th of the Succeeding month. Based on this the supplier would get the credit of TDS. If the deducted amount is not paid to the government, the government determines the amount and use the law to recover the tax amount from the deductor.
Issue of TDS
The deductor should issue the TDS certificate to the deductee in the form GSTR-7A, this should be done within 5 days after registering. If the certificate is not issued within 5 days, the deductor is liable to pay a late fee of Rs.100 per day. The late fees should not be more than Rs. 5000/-.
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