GST compliance for tax deducted at source (TDS) in India
GST compliance for tax deducted at source (TDS) in India
GST compliance for tax deducted at source (TDS) in India
GST compliance for Tax Deducted at Source (TDS) in India is essential for certain specified taxpayers who are required to deduct GST at the time of making payments to suppliers or service providers. TDS under GST is similar to TDS under income tax, where the tax is deducted at the source and remitted to the government.
Here are the key points to understand about GST compliance for TDS in India:
1. Applicability of TDS under GST:
TDS under GST is applicable to certain specified taxpayers, primarily the government departments, local authorities, and other notified entities who have a threshold for TDS applicability. As of my last update in September 2021, TDS was applicable to taxpayers with an annual aggregate turnover exceeding ₹10 crores.
2. TDS Rate and Computation:
The TDS rate under GST is 1% of the payment made to the supplier of goods or services. The tax is deducted on the net value of taxable supplies after deducting any discounts, rebates, or other adjustments.
3. TDS Certificate (GSTR-7A):
The deductor is required to issue a TDS certificate in GSTR-7A to the deductee (supplier or service provider) within five days of crediting the amount to the government. The deductee can claim credit for the TDS amount in their electronic cash ledger.
4. TDS Return (GSTR-7):
The deductor needs to file a TDS return in Form GSTR-7 on a monthly basis by the 10th of the following month. The return contains details of TDS deducted and deposited.
5. TDS Payment and Due Dates:
The TDS amount deducted by the deductor should be deposited to the government by the 10th of the following month. For example, TDS deducted in the month of June should be deposited by the 10th of July.
6. TDS Certificate for Non-Resident Suppliers:
In the case of non-resident suppliers, the TDS certificate (GSTR-7A) should be issued within five days of making the payment or crediting the amount, whichever is earlier.
7. TDS Applicability on Intra-State and Inter-State Supplies:
TDS is applicable on both intra-state supplies (within the same state) and inter-state supplies (between different states).
8. Adjustment of TDS Amount by Deductee:
The TDS amount deducted and reflected in the TDS certificate can be adjusted by the supplier in their electronic cash ledger to discharge their GST liability.
9. TDS Refund and Excess TDS:
In case of excess TDS deducted, the deductee can claim a refund of the excess amount in their electronic cash ledger.
10. Non-Compliance and Penalties:
Failure to deduct or deposit TDS or any other non-compliance may attract penalties and interest as per the GST law.
Proper GST compliance for TDS is crucial to avoid penalties and ensure smooth transactions for the specified taxpayers. Deductors must accurately deduct and deposit TDS, issue TDS certificates, and file TDS returns on time. Deductees should reconcile the TDS certificates with their GST returns and claim credit for the TDS amount. Seeking advice from qualified tax professionals or Chartered Accountants can further assist in understanding and ensuring complete GST compliance for TDS in India.
What is Company Tax Return Filing? Company tax return filing refers to the process of submitting the necessary documents and information to the tax authorities to report the income, expenses, deductions, and taxes of a company for a specific ...
TDS or Tax Deducted at Source is income tax reduced from the money paid at making specified payments such as rent, commission, professional fees, salary, interest etc., by the persons making such payments. Usually, the person receiving Income is ...
Company tax return compliance in India Company tax return compliance in India is essential to ensure that businesses fulfill their legal obligations and meet the Income Tax Department's requirements. Non-compliance can lead to penalties, interest, ...
Income tax filing for tax compliance in India 1. Determine Your Residential Status: - Determine whether you are a resident, non-resident, or a resident but not ordinarily resident (RNOR) for the relevant financial year as per the Income Tax Act. 2. ...
Tax Planning for Digital Businesses in Bangalore Introduction: In the digital age, Bangalore has emerged as the epicenter of India's technology revolution, earning the moniker "Silicon Valley of India." With a vibrant startup ecosystem, a robust IT ...