TDS in GST (Dec 2018)

What is TDS in GST?

TDS Means Tax Deducted at Source

It is a tax which is deducted on certain payments

From 1 Oct 2018

On Payments by Government Departments to Vendors,Govt Department will deduct 2% TDS Under GST

This is applicable only if Contract Value is more than 250000

Note:-

• TDS under GST is separate from TDS under Income Tax
• Both TDS under GST and Income Tax will be applicable

Solving these with GST

Actually,Contractor charges GST on Bill Also

Suppose GST Rate is 18%

How will A calculate GST in this case

He will reduce TDS From his GST payable

Example

Suppose A gives Services to Govt for 10 lacs+ 18% GST

Govt will deduct 10000 TDS under Section 194C+20000 TDS under GST

Answer

Govt will pay A 1150000

(1180000-10000-20000)

Suppose Expenses of A are 4 Lacs+18% GST

Answer

COMPUTATION

Hence, GST payable will be reduced from tax liability

What is Purpose of TDS Deduction in this case?

TDS deducted is treated like advance GST

Deductee claims Credit of it in his Electronic Cash Ledger

In easy language,It is reduced from GST Payable and balance GST payable to be deposite by challan by deductee

Section 51

TDS On Payments by Govt Authorities and PSU

Rate of TDS

TDS Rate is as follows

Cutoff

If total value is greater than 250000 In single contract,TDS in GST is to be deducted

Whether All companies have to Deduct TDS?

No

TDS is to be deducted only by Government Departments and PSU

Following persons are required to deduct TDS:-

1. a department or establishment of the Central Government or State Government; or
2. local authority; or
3. Governmental agencies; or
4. such persons or category of persons as may be notified by the Government on the recommendations of the Council

Persons notified under Section 51(1)(d):

1. an authority or a board or any other body, –
   1. set up by an Act of Parliament or a State Legislature; or
   2. established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;
2. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
3. public sector undertakings

What is Procedure to be followed by Deductor (Govt Departments(PSU)?

They have to compulsory take separate registration for TDS

By 10 th of next month,they have to deposit TDS and file TDS Return in Form

Also,they have to electronically issue TDS Certificate to Deductee by 15th of Next Month

In case of late payment,18% interest is applicable

What is Procedure to be followed by Deductee (Contractor Giving Service to Govt)?

They have to normally file GSTR3B and GSTR1

But now,they have to show TDS Credit in their Return GSTR3B

In easy language,It is reduced from GST Payable and challan is deposited of balance amount

Q1

Infosys,Bangalore Provided Technical Service To Ministry Of Finance,Delhi Of 50 Lacs+18% Gst

Ministry Of Finance Paid Infosys After Deducting Tds Under Gst And Income Tax

Suppose Expenses Of Infosys Are

Salary - 10 LACS

IT Expenses (From A Ltd) - 20 LACS+18% GST

What is TDS Rate as per income Tax?

10% Under sec. 194 J

What is TDS Rate as per GST?

2% IGST Under sec 51

What Is The Amount Received By Infosys?

What is GST payable by infosys?

Computation

Pass Entry In Books Of Both Parties:-

COMPUTATION

CASH LEDGER

CREDIT LEDGER

Q2

SK Ltd provided Manpower Services (Labour) to its different Clients

It provided Labour Service to its different clients on contract

TDS Not Deducted because as per TDS in Income Tax limit 30000 single Contract or 100000 per year and TDS in GST limit is 250000

TDS (GST) Will be deducted on which of above transactions?

EXPENSES OF SK LTD ARE

COMPUTATION

CASH LEDGER

CREDIT LEDGER