GSTR 7 and TDS Explained in 6 ‘Should Ask Questions’
When it comes to Indirect Taxation, one item that forms an important part of the team’s job is filing TDS or Tax Deducted at Source. The government mandates institutions to collect tax at the time of income generation itself rather than at a later date hence it is called Tax Deducted at Source. Same is then deposited with the government.
TDS is applicable to various incomes such as salaries, interest received, commission received etc.
The person responsible for deducting the tax before passing on the benefits is liable to deposit it with the authorities and is called as deductor. While the person who receives the payment after deduction is termed as deductee.
Conceptually, TDS under GST is similar to TDS under income tax. In the GST regime, the deductor is supposed to declare the TDS deposits through a form – GSTR 7.
The provisions of TDS are effective from 1st Oct 2018. Here are 5 questions you should know as a tax deductor:
As per section 51 of CSGT Act, the TDS is to be deducted by the specified persons where the total value of contract exceeds Rs. 2.5 lakhs. The total value here is exclusive of taxes.
As per GST law, the TDS is deducted by the Individuals/Entities mentioned below:
Persons liable to deduct TDS need to get a separate registration for this purpose. The TDS registration under GST is based on the existing Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act of the said person. Thus, unless you have TAN you cannot opt for GST registration for TDS.
It should be noted that for persons who already have regular GST registration, TDS will be an additional registration for them if applicable. In such cases, due care should be taken that appropriate GSTIN are used while generating and reporting supply invoices and while deducting TDS.
TDS is to be deducted at the rate of 2 percent (i.e. 1% CGST and 1% SGST and 2% For IGST) on payments made to the supplier of taxable goods and/or services. It needs to be deposited as per guidelines provided in circular 65. The TDS (Tax Deducted at source) transactions need to be reported to the government through form GSTR 7.
GSTR 7 consists of details regarding TDS deducted, the amount of TDS paid & payable, and any refund of TDS claimed. Based on form GSTR 7, the Tax Deduction Certificate will be made available for the deductee on the common portal in Form GSTR-7A. The deductee can then only claim the input credit of such TDS deducted and utilize for the payment of output tax liability.
A taxpayer is required to file his/her GSTR 7 for the given month by the 10th day of the succeeding month. For instance, the due date to file your GSTR 7 for the month of March 2019 shall be 10th April 2019.
A TDS certificate i.e. GSTR 7A needs to be issued within 5 days of depositing the tax to the government.
Failure to file form GSTR 7 on or before the given due date can lead to a ‘per day penalty’ of Rs 100 under CGST & Rs 100 under SGST. The total late fee shall be calculated along with an 18% interest applicable from the day following the due date to the date of payment.
There are certain cases where TDS is not to be deducted. Transactions when the location of supplier and place of supply is different from the State of the registration of the recipient, the provisions of TDS do not apply.
|Sr. No.||Supplier State||Receiver State||Place of Supply||Condition Satisfied||Transaction Type||TDS to be Deducted|
If any excess amount is deducted and paid to the government, a refund can be claimed by deductor. But there is one condition for refund. The said deposited TDS cannot claim by the deductor if it is already added by government to the electronic cash ledger of deductee. So, in this case, the deductee can claim the refund for extra tax deducted subject to refund provisions of the act.
While the above provisions are for persons liable to deduct TDS, if you are the supplier to such persons, keep in view the following points:
Apparently, the taxpayer cannot revise form GSTR 7 in the current month once the return has been filed. For any mistake identified, the taxpayer has to wait until the following month’s filings to rectify the error. For instance, for an error while filing GSTR 7 in the month of March, rectification can be made in the month of April or the later months as and when the error or omission (if any) is identified.
You can prepare your form GSTR 7 with IRIS Sapphire, one of India’s leading GST Suvidha Providers. IRIS Sapphire is GSTR management software that can provide you with end-to-end solutions for all your GST related hassles.
Along with form GSTR 7, IRIS Sapphire also provides supports all the major forms like GSTR 1, GSTR 3B, GSTR6, GSTR 8, GSTR 9 and ITC 04.