To understand the circular first, we should understand it’s background. The GST law came into force on July 1st, 2017 but the following section shall become applicable with effect from 01st, October 2018. The notification regarding the same was published on September 13th, 2018.
Deduction of Tax
Section 51 of the CGST Act, 2017 lays down for the deduction of tax @ 1 % from the amount paid to the supplier who has supplied goods or services or both. The tax shall be deducted only if the value of the goods or services supplied does not exceed INR 2,50,000.
Section 51 specifies the deduction of tax for the following persons: –
- The body/ board or an authority having 51% or more sharing by way of equity or control of Central/ State Government or set up by an Act of Parliament or a State Legislature
- Any Society which is established by the Local Authority or the Central Government or the State Government
- Public Sector Undertakings
The tax deducted shall be deposited with the Government within the period of 10 days from the end of the relevant month during which the tax was deducted. The particulars of the tax deducted and paid i.e. tax deducted and details of deductees are to be submitted in form GSTR–7. A certificate specifying the details for the tax deducted is also to be issued by the deductor to the deductee.
However, the tax shall not be deducted in case the state of registration of the recipient is different from the state of location of the supplier and place of supply.
Payment of tax deducted
The tax shall be deposited to the Government through any payment mode such as NEFT, Cheque or through the challan.
There are two alternatives for the payment of the same: –
- Challan generated for each and every payment made in the month.
- Grouping the Deduction of TDS on a periodic basis.
The Department of Revenue, Ministry of Finance, Government of India has also specified that all departments in the Central Government should give instructions to all its Drawing and Disbursing Officer (DDO) under them to adhere to the procedure for GST TDS payment deducted from the suppliers.