CBIC issues Guidelines for Deductions and Deposits of TDS under GST

Sep 21, 2018 | by Avantis RegTech Legal Research Team


The Central Board of Indirect Taxes and Customs (CBIC) passed a Circular dated September 14, 2018, giving the guidelines for deductions and deposits of Tax Deducted at Source (TDS) by the Drawing and Disbursing Office (DDO).

Section 51 of the Central Goods and Services Tax (CGST) Act 2017 provides for deduction of tax by the Government Agencies (Deductor) or any other person to be notified in this regard, from the payment made or credited to the supplier (Deductee) of taxable goods or services or both, where the total value of such supply exceeds Rs. 2,50,000.

The amount deducted as tax shall be paid to the Government within 10 days after the end of the month along with a return in FORM GSTR-7 giving the details of deductions and deductees on the common portal for every month on which the benefit of deduction shall be made available to the deductee. Further, the deductor has to issue a certificate to the deductee mentioning therein the contract value, rate of deduction, amount deducted etc.

As per the Act, every deductor shall deduct the tax amount from the payment made to the supplier of goods or services or both and deposit the tax amount so deducted with the Government account through NEFT to RBI or a cheque to be deposited in one of the authorized banks, using challan on the common portal. In addition, the deductors are entrusted the responsibility of filing return in FORM GSTR-7 on the common portal for every month in which 2 deduction has been made based on which the benefit of deduction shall be made available to the deductee. All the DDOs in the Government, who are performing the role as deductor have to register with the common portal and get the GST Identification Number (GSTIN).

Section 52 which provides for tax deduction at source was not notified to come into force with effect from July 01, 2017, the date from which GST was introduced. Government has recently notified that these provisions shall come into force with effect from October 01, 2018, vide Notification No. 50/2018 – Central Tax dated 13th September, 2018. The Circular specify two options along with detailed process which is to be follow by DDO for payment process of Tax Deductions at Source and they are:

·         Option I: Generation of challan for every payment made during the month

·         Option II: Bunching of TDS deducted from the bills on weekly, monthly or any periodic manner

 

In order to give effect to the above options from October 01, 2018, a process flow of deduction and deposit of TDS by the DDOs has been finalised in consultation with Controller General of Accounts (CGA) for guidance and implementation by Central and State Government Authorities.

The provisions of Section 51 of the CGST Act 2017 shall come into force with effect from October 01, 2018; vide Notification No. 50/2018 – Central Tax dated September 13, 2018.

 [Circular No. 65/39/2018-DOR]

URL: http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_No.65.pdf;jsessionid=C2E021D8B90F98CCD40B4D5EE00C98BC


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