TDS refers to tax deducted at source. The concept under Goods and Service Tax is similar as given under the Income Tax Act. Individuals or industries who make payments for services and goods are liable to deduct tax at source when the payment meets a certain threshold limit. The Form GSTR-7 is all about Tax deducted at source (TDS) under GST.
Every eligible taxable person who deducts TDS needs to file GSTR-7. Every person who deducts TDS shall file the return by 10th of the following month from a certain tax period. GSTR-1 must get filed irrespective of the filing requirement of Form GSTR-7.
TDS includes a total value of services and goods that exceeds Rs 2.5 Lakhs annually. The deduction rate of TDS is 2% is associated with CGST 1% + SGST 1% and 2 % of IGST of interstate supplies. Taxpayers also need to note that TDS must not get deducted if the location of the supplier and the place of supply are different from the place of registration of the receiver.
According to section 51, here are the liabilities of the deductors who can deduct TDS under GST:
with fifty-one per cent. or more participation by way of equity or control, to carry out any function; or
The deductors who we talked about in the above section are able to deduct TDS from the amount they pay to their suppliers. These recipients can only deduct the TDS tax if the total value of the taxable goods and/or services meets Rs 2.50 Lakhs. Also, For Intra-state supplies, TDS @ 2% is deductible where 1% represents CGST and 1% represents SGST. However, in the case of Inter-state supplies, 2% represents IGST.
Moreover, TDS is also deductible at the time of making payment regardless of the type of payment mode used.
The deductors can deduct TDS from the payment made to the supplier under the following conditions-
In the case where “Location of Supplier” and “Place of Supply” is different from the state of registration of recipient of goods/services then the recipient is not required to deduct TDS while making payment.
Understand this case with the following example:
The GSTR-7 is a monthly tax return which is mandatory to file by every person who is liable to deduct TDS under GST. This return should contain these details-
Form GSTR-7 is all about TDS payable and paid in a particular month. The deductees should be able to access all the information in the common GST portal. After the person deducts the TDS, he/she have to file the return within 10 days from the end of the month in which TDS is deducted and submit it to the government.
Every deductor should file the Form GSTR-7 within 10 days from the end of the month of TDS deduction. For example, if you deduct TDS in August 2020, you have to file the return on September 10th, 2020.
The GSTR 7A TDS certificate gets generated in the GSTR-7A return and it is furnished on the basis of details provided by the deductor in the GSTR-7 form.
Penalties for non-submission of TDS certificate under GST
In case the deductor fails to submit TDS certificate to.deductee will have to pay the following penalties.
The deductor is responsible to provide fees, penalties, and other payable amounts if a late occurs. So in that case, the below details will be applicable-
The return is comprised of a total of 8 sections that need to be proper and valid-
GSTIN: a GSTIN is a PAN-based 15-digit Goods and Services Taxpayer Identification Number which will be provided to all taxpayers. While filing the return, the taxpayers will be able to find the auto-populated GSTIN number on the return.
The original name of the TDS deductor: The name of the deductor will come auto-populated in the GSTR-7 Return.
Details regarding TDS deducted: Here each of the taxpayers needs to provide details which include the GSTIN of the person who is deducting TDS under GST, along with the total amount of TDS deducted.
Corrections of details provided in the earlier tax period: If any correction needed for the data submitted in the previous form can be corrected here in this section. Based on this modification, the TDS certificate (GSTR-7A) will also be changed.
TDS paid: Here the taxable persons need to provide all the details regarding the TDS deducted by the deductee along with the information of tax paid to the central government.
Payable and paid fees and interest: In case of any late fees or interest needs to be added in the total TDS amount, the taxpayers need to include details regarding the same in this section.
Refund details about electronic cash ledger: The taxpayers need to include refund details of TDS deducted from an electronic cash ledger. Here the taxable person also provides the bank account details where the refund should be credited.
Interest payments in electronic cash ledger: This section comes auto-populated after the taxpayers file the return.
All the auto-populated information in various sections of the Form GSTR-7 is not changeable and for that, taxpayers can use the modification section. However, the information you provide manually should be correct in fact, you also need to sign a declaration before furnishing the return.
Read More: Standard Operating Procedure in case of alerts in IGST Refund
