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DUTIES & RESPONSIBILITIES OF TAX DEDUCTOR UNDER THE

GOODS AND SERVICES TAX ACTS

What is GST?

Goods and Services Tax (GST) is one indirect tax for the whole Nation, which will make India one

unified common market. GST is a single tax on the supply of goods and services, right from the

manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the

subsequent stage of value addition, which makes GST essentially a tax only on value addition at

each stage.

Our Constitution is amended to introduce GST system in India. New Articles 246A, 269A and

279A are inserted. Article 246A empowers both Center and the States to levy tax on supply of

goods and services in a State. Article 269A empowers the Center to levy tax on supply of goods and

services between two States. GST Council is formed under Article 279A.

Under GST, there are three major taxes- Central GST (CGST), State GST (SGST) and Integrated

GST (IGST).

CGST is levied by Central Government on supply of goods or Services in a State.(Intra-State

Supply)

SGST is levied by State Government on supply of goods or Services in a State. (Intra-State

Supply)

IGST is levied by Central Government on supply of goods or Services between two States.

(Inter-State Supply)

Who is Tax Deductor? :

(a) A department or establishment of the Central Government or State Government; or

(b) Local authority; or

(c) Governmental agencies; or

(d) Such persons or category of persons as may be notified by the Government on the

recommendations of the Council, as tax deductor.

TDS under GST:

All the DDOs are familiar with the procedure of deduction of tax at source under the Income Tax

Act and State VAT Act. Though the procedure of deduction of tax at source under VAT appears

to be similar to the procedure of deduction of tax at source under GST, there are some basic

differences between the two.

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Sec.51 of Central GST Act and Assam GST Act or Sec. 20 of Integrated GST Act provides the

procedures for deduction of tax at source by a Tax Deductor from the payment made or credited

to the supply of taxable goods or services or both, where the total value of supply of goods or

services or both, under a contract, exceeds two lakh and fifty thousand rupees.

Tax shall be deducted under CGST and SGST or under IGST Act.

Threshold limit for deduction of tax is 2.50 lakh of the contract. Tax deduction is not

required, if the total value of supply of goods or services or both, under a contract, is

2.50 lakh or less than 2,50 lakh.

Tax is deductable if the payment is made in part whose value is less than 2.5 lakh and

total contract value exceeds 2.50 lakh. (Example-Contract Value 2.51 lakh. Supply is

made against 3 bill/invoices of 90 thousand, 80 thousand and 81 thousand. Tax shall be

deducted from the total value of each bill as the contract value is more than 2.50 lakh).

The rate of tax for deduction is 1% under SGST and 1% under CGST Act where the

supplier is registered in Assam. Total 2% tax on the amount of bill or invoice shall be

deducted. (Intra-State Supply)

The rate of tax for deduction is 2% under IGST Act where the supplier is registered in

outside the State of Assam. (Inter-State Supply)

If CGST and SGST are deducted, deduction of IGST is not required. Similarly, if IGST

is deducted, deduction of CGST and SGST is not required. IGST is combination of

CGST and SGST. So the tax rate of IGST is always double of CGST or SGST.

Value of Supply for Tax Deduction:

To determine the total value of supply for deduction of tax, the taxes under GST shown

in the invoice by the supplier shall be excluded. That means, no tax shall be deducted on

SGST, CGST or IGST tax amount shown in the bill or invoice.

All other charges shall be included in the total value of supply for calculating the tax for

deduction except taxes charged under GST.

ILLUSTRATION:

Where the supplier is registered in Assam:

Particulars Rate

(in Rs.)

Quantity

(in nos)

Value

(in Rs.)

Tax (in Rs.)

CGST

(6%)

SGST

(6%)

IGST

(12%)

Computer set 50,000.00 6 3,00,000.00 18,000.00 18,000.00 0.00

Total = Rs. 3,36,000.00

Total bill amount for calculation of tax is = Rs. 3,00,000.00

Amount of tax to be deducted at source:

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SGST @ of 1% of Rs. 3,00,000.00 = Rs. 3,000.00

CGST @ of 1% of Rs. 3,00,000.00 = Rs. 3,000.00

Total deduction of tax is Rs. 6,000.00. The remaining amount of tax i.e. Rs. 36,000.00 – Rs. 6,000.00 or

Rs. 30,000.00 (SGST 15,000.00 + CGST 15,000.00) will be paid by the supplier himself to the

Government at the time of filing his return.

Where the supplier is registered outside Assam:

Particulars Rate

(in Rs.)

Quantity

(in nos)

Value

(in Rs.)

Tax (in Rs.)

CGST

(6%)

SGST

(6%)

IGST

(12%)

Computer set 50,000.00 6 3,00,000.00 0.00 0.00 36,000.00

Total = Rs. 3, 36,000.00

Total bill amount for calculation of tax = Rs. 3,00,000.00

Amount of tax to be deducted at source:

IGST @ 2% of Rs. 3,00,000.00 = Rs. 6,000.00

Total deduction of tax is rupees Rs. 6,000.00. The remaining amount of tax i.e. Rs.36,000.00 – Rs.

6,000.00 or Rs. 30,000.00 will be paid by the supplier himself to the Government at the time of filing his

return.

If the charge of services such transportation, installation etc, is mentioned in the invoice

separately, tax on services shall also be deducted as per rate and manner stated above.

ILLUSTRATION:

Particulars Rate

(in Rs.)

Qty.

(in nos)

Value

(in Rs.)

Tax (in Rs.)

CGST SGST IGST

Rate Amount Rate Amount Rate Amount

Computer set 50,000 6 3,00,0 00 6% 18,000 6% 18,000 12% 0.00

Transportation 6,000 6 36,000 5% 1,800 5% 1,800 10% 0.00

Installation 4,000 6 24,000 10% 2,400 10% 2,400 20% 0.00

Total 3,60,000 22,200 22,200 0.00

Grand Total Rs. = 4,04,400.00

Total bill amount for calculation of tax is = Rs 3,60,000.00

Amount of tax to be deducted at source :

SGST @ 1% of 3,60,000.00 = Rs. 3,600.00

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CGST @ 1% of 3,00,000.00 = Rs. 3,600.00

Total amount of tax to be deducted = Rs. 7,200.00.

IGST shall be deducted using similar method for determination of total value of supply for

calculation of tax.

Tax Deduction from the Bill of Works Contractor:

Works Contract is termed as composite supply in Sec.8 of GST Acts. A composite supply

comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such

principal supply’

Works contract consist of two or more supplies such as

(i) goods of different type,

(ii) services of labour, machineries, consultancy and transport etc.

Works contract is treated as supply of services as it listed in composite supply {6(a) of Schedule

II}.

There shall be no ‘Composition Scheme’ for works contractors under GST.

Works contract as a supply shall have separate tax rate.

Hence, tax shall be deducted from total value of supply taking the value of goods and services

together (as done in case of WC-2 contractor under VAT regime)

Deduction of Tax in Transitional Stage from VAT to GST:

Where a supplier has made any sale of goods in respect of which tax was required to be deducted

at source under the Assam Value Added Tax, 2003 and has also issued an invoice for the same before

the appointed day, no deduction of tax at source under section 51 shall be made by the deductor under

the said section where payment to the said supplier is made on or after the appointed day.

Tax shall be deducted under VAT, if

Supplied under VAT

Bill submitted or issued invoice before GST

But payment is made after GST

Registration of Tax Deductor at Source :

Persons who are required to deduct tax under section 51, whether or not separately registered under this

Act shall be registered under this Act. (Sec.24)

A Tax Deductor shall have a separate registration as Tax Deductor though he is registered for

other trading activities.

A Tax Deductor shall submit an application online in GST Portal.

The format of online application is GST REG-7.

Application shall be signed electronically using Digital Signature Certificate (DSC)

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Essential Documents Required for Registration:

A Tax Deduction and Collection Account Number (TAN) issued under Income Tax Act, 1961.

A Digital Signature Certificate (DSC) for signing the online application electronically.

Office email id and Office mobile/phone number for electronic verification.

Proof of address of the Office (electricity bill, Municipality receipt etc.

Amendment of Registration :

If there is any change in the particulars furnished in the application of registration (FORM GST REG-

07) :

DDOs need to submit an online application in FORM GST REG-14 along with supporting

documents for amendment of registration. (e.g., change in name & Personal information of DDO

such as PAN, address, Mobile number etc.

Cancellation of Registration :

If the Tax Deductor is no longer liable to deduct tax at source u/s 51, the registration shall be cancelled

in FORM GST REG -08.

Online submission of Returns :

Every registered person required to deduct tax at source under the provisions of section 51 shall

furnish, in such form and manner as may be prescribed, a return, electronically, for the month in which

such deductions have been made within ten days after the end of such month. (Sec.39)

TDS return shall be submitted online in GST Portal.

The format of online TDS return is GSTR-7.

The last date of filing of online TDS return is 10th of succeeding month.

ILLUSTRATION: Online TDS return for the month of July, 2017 shall be filed in GST Portal on

or before 10th of August, 2017.

The particulars of TDS return, filed online, shall be made available to each supplier on GST

Portal after 10th of the month so that the supplier can match the details for filing his return.

The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in

the return of the deductor

Issue of TDS Certificate:

The Certificate of Tax Deduction shall be made available electronically to the deductee in GST

portal. The particulars of the Certificate shall be auto populated on basis of TDS return already

filed.

The format of TDS Certificate is GSTR-7A.

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DSC/E-Signature is required for online submission of returns etc.

Mode of TDS payment:

Payment of TDS can be made in following modes by generating an online challan:

1 Internet Banking through authorized Banks

2 Credit Card or Debit Card through authorized Banks

3 NEFT or RTGS from any Bank

4 Over the Counter(OTC) through authorized Banks by cash, cheque or Demand Draft

5 Any other mode of payment for DDOs of Govt. Deptt as may be notified.

Every payment made by the TDS Deductor shall be credited to electronic cash ledger of the Tax

Deductor. He shall utilize the amount available in his electronic cash ledger to discharge his tax

liability of the return.

Interest, Fees, Penalties, Refund etc.

The amount deducted as tax shall be paid to the Government by the deductor within ten days

after the end of the month in which such deduction is made.

If any deductor fails to pay to the Government the amount deducted as tax, he shall pay interest

at the rate of 18% in addition to the deducted amount of tax.

The deductor shall furnish to the deductee a certificate of tax deduction mentioning therein the

contract value, rate of deduction, amount deducted, amount paid to the Government and other

particulars through GST Portal.

If any deductor fails to furnish the TDS certificate, after deducting the tax at source, within five

days of crediting the amount to the Government, the deductor shall pay, by way of a late fee, a

sum of one hundred rupees per day from the day after the expiry of five day period until the

failure is rectified, subject to maximum amount of five thousand rupees.

The determination of the amount shall be made in the manner specified in section 73 or section

74 if found default in deduction of tax or fails to deposit the deducted tax to the Government.

The refund to the deductor or the deductee arising on account of excess or erroneous deduction

shall be dealt with in accordance with the provisions of section 54:

No refund to the deductor shall be granted, if the amount deducted has been credited to the

electronic cash ledger of the deductee.

If a Tax Deductor at Source,

(a) fails to deduct the tax or

(b) deducts less than the amount required to be deducted or

(c) where he fails to pay to the Government the amount deducted as tax;

he shall be liable to pay a penalty of

(i) ten thousand rupees or

(ii) an amount equivalent to the tax evaded or

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(iii) the tax not deducted whichever is higher.

Differences Between GST and VAT in Respect of Deduction of Tax at Source:

VAT GST

The word ‘supply’ in common parlance is used in

the office of DDOs to mean the supply of goods

to a Government Department or organization.

“Supply” is a key word in GST. It includes sale,

execution of work contract, stock transfer etc.

While using the word ‘contract’ we may

generally mean works contract.

In GST the word “contract” used for a wider

meaning. It covers agreement for supply.

TAN under VAT is required to deduct tax. Online Registration as Tax Deductor is required

to deduct tax.

A manual annual return is to be submitted in

Form no 35 under VAT

A monthly online return in Form GSTR-7 shall

be submitted in GST.

Payment of the deducted tax is to be deposited

within ten days of succeeding month in a manual

challan.

Payment of the deducted tax shall be deposited

within ten days of succeeding month in online

mode.

There is a ‘composition scheme’ for works

contractor under VAT.

There will be no ‘composition scheme’ for works

contractor under GST. WC-2 is not required

under GST.

On works contract, tax is deducted @ 5%

calculated on total value of the bill for WC-2

contractors and 15% on goods in other cases

subject to production of less deduction certificate.

Tax shall be deducted at the rate of 1% under

CGST and 1% under SGST or 2% under IGST

which shall be calculated on the total value of

supply. (taking both goods and services together

as done in case of WC-2 contractor under VAT)

Tax deduction is not required from the bill of the

supplier who is registered outside Assam

IGST shall be deducted from the bill of the

supplier who is registered outside Assam

The monetary threshold limit under VAT for

deduction of tax is Rs, 5000.00.

No deduction is required if the total value of

supply under a contract is 2.5 or less.

TDS certificate is issued manually along with the

copies of challans of deposited tax.

TDS certificate shall be issued online in Form

GSTR-7A within 5 days of payment of deducted

tax. The certificate will be auto populated in GST

portal as per details furnished in the return.

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Form GST REG-07 [See Rule ------]

Application for Registration as Tax Deductor at source (u/s 51) or Tax Collector at source (u/s 52)

State /UT – District –

Part –A

(i) Legal Name of the Tax Deductor or Tax Collector( As mentioned in PAN/ TAN)

(ii) PAN

(Enter PAN of the Business; PAN of Individual in case of Proprietorship concern)

(iii) TAN (Enter TAN, if PAN is not available)

(iv) Email Address

(v) Mobile Number

Note - Information submitted above is subject to online verification before proceeding to fill up Part-B.

Part –B

1 Trade Name, if any

2 Constitution of Business (Please Select the Appropriate)

(i) Proprietorship ¢ (ii) Partnership ¢

(iii) Hindu Undivided Family ¢ (iv) Private Limited Company ¢

(v) Public Limited Company ¢ (vi) Society/Club/Trust/Association of Persons ¢

(vii) Government Department ¢ (viii) Public Sector Undertaking ¢

(ix) Unlimited Company ¢ (x) Limited Liability Partnership ¢

(xi) Local Authority ¢ (xii) Statutory Body ¢

(xiii) Foreign Limited Liability Partnership

¢ (xiv) Foreign Company Registered (in India) ¢

(xv) Others (Please specify) ¢

3 Name of the State ⏏ District ⏏

4 Jurisdiction - State Centre

Sector /Circle/ Ward /Charge/Unit etc.

5 Type of registration Tax Deductor Tax Collector

6. Government (Centre / State/Union Territory) Center State/UT

7. Date of liability to deduct/collect tax

DD/MM/YYYY

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8. (a) Address of principal place of business

Building No./Flat No. Floor No.

Name of the Premises/Building Road/Street

City/Town/Locality/Village District

Block/Taluka

Latitude Longitude

State PIN Code

(b) Contact Information

Office Email Address Office Telephone number

Mobile Number Office Fax Number

(c) Nature of possession of premises

Own Leased Rented Consent Shared Others(specify)

9. Have you obtained any other registrations under GST in the same State?

Yes No

10 If Yes, mention GSTIN

11 IEC (Importer Exporter Code), if applicable

12 Details of DDO (Drawing and Disbursing Officer) / Person responsible for deducting tax/collecting tax

Particulars

Name First Name Middle Name Last Name

Father’s Name

Photo

Date of Birth DD/MM/YYYY

Gender <Male, Female, Other>

Mobile Number Email address

Telephone No. with STD

Designation /Status Director Identification Number (if any)

PAN Aadhaar Number

Are you a citizen of India? Yes / No

Passport No. (in case of Foreigners)

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Residential Address

Building No/Flat No Floor No

Name of the Premises/Building Locality/Village

State PIN Code

2 13. Details of Authorized Signatory

Checkbox for Primary Authorized Signatory

Details of Signatory No. 1

Particulars First Name Middle Name Last Name

Name

Photo

Name of Father

Date of Birth DD/MM/YYYY Gender <Male, Female, Other>

Mobile Number Email address

Telephone No. with STD

Designation /Status Director Identification Number (if any)

PAN Aadhaar Number

Are you a citizen of India? Yes / No Passport No. (in case of foreigners)

Residential Address (Within the Country)

Building No/Flat No Floor No

Name of the Premises/Building Road/Street

City/Town/Locality/Village District

State PIN Code

Block/Taluka

Note – Add more …

14. Consent I on behalf of the holder of Aadhar number <pre-filled based on Aadhar number provided in the form> give consent to “Goods and Services Tax Network” to obtain my details from UIDAI for the purpose of authentication. “Goods and Services Tax Network” has informed me that identity information would only be used for validating identity of the Aadhar holder and will be shared with Central Identities Data Repository only for the purpose of authentication.

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List of documents to be uploaded (not applicable to a department or establishment of the Central Government or State Government or Local Authority or Governmental agencies):-

Proof of Principal Place of Business: (a) For Own premises – Any document in support of the ownership of the premises like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. (b) For Rented or Leased premises – A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. (c) For premises not covered in (a) & (b) above – A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents may be uploaded. (d) For rented/leased premises where the Rent/lease agreement is not available, an affidavit to that effect along with any document in support of the possession of the premises like copy of Electricity Bill. (e) If the principal place of business is located in an SEZ or the applicant is an SEZ developer, necessary documents/certificates issued by Government of India are required to be uploaded.

Instructions for submission of application for registration as Tax Deductor/ Tax Collector.

1. Enter name of Tax Deductor /Tax Collector as recorded on TAN/ PAN of the Business. TAN/PAN shall be verified with Income Tax database. 2. Provide Email Id and Mobile Number of DDO (Drawing and Disbursing Officer) / Person responsible for deducting tax/collecting tax for verification and future communication which will be verified through One Time Passwords to be sent separately, before filling up of the application.

3. Person who is acting as DDO/ Person deducting/collecting tax can sign the application.

4. The application filed by undermentioned persons shall be signed digitally.

Sr. No Type of Applicant Digital Signature required

1. Private Limited Company

Public Limited Company

Public Sector Undertaking

Unlimited Company

Limited Liability Partnership

Foreign Company

Foreign Limited Liability Partnership

Digital Signature Certificate(DSC) class 2 and above

2. Other than above Digital Signature Certificate class 2 and above, e-Signature or any other mode as specified or as may be notified.

15. Verification

I hereby solemnly affirm and declare that the information given herein above is true and correct to the best of my knowledge and belief and nothing has been concealed therefrom

(Signature)

Place: Name of DDO/ Person responsible for deducting tax/collecting tax/Authorized Signatory

Date: Designation

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5. All information relating to PAN, Aadhaar, DIN, CIN shall be validated online by the system and Acknowledgment Receipt Number will be generated after successful validation of all the filled information.

6. Status of the application filed online can be tracked on the Common Portal.

7. No fee is payable for filing application for registration.

8. Authorized shall not be a minor.

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Form GSTR-7 [See Rule…]

Return for Tax Deducted at Source

Year Month

1. GSTIN 2. (a) Legal name of the Deductor Auto Populated (b) Trade name, if any Auto Populated

3. Details of the tax deducted at source (Amount in Rs. for all Tables)

GSTIN

of deductee Amount paid to deductee on which tax is

deducted Amount of tax deducted at source

Integrated Tax Central Tax State/UT Tax

1 2 3 4 5

4. Amendments to details of tax deducted at source in respect of any earlier tax period

Original details Revised details Month GSTIN of

deductee Amount paid to

deductee on which tax is deducted

GSTIN of

deductee

Amount paid to deductee on which

tax is deducted

Amount of tax deducted at source

Integrated Tax

Central Tax

State/UT Tax

1 2 3 4 5 6 7 8

5. Tax deduction at source and paid

Description Amount of tax deducted Amount paid 1 2 3

(a) Integrated Tax (b) Central Tax (c) State/UT Tax

6. Interest, late Fee payable and paid

Description Amount payable Amount paid

1 2 3 (I) Interest on account of TDS in respect of (b) Integrated tax (b) Central Tax (c) State/UT Tax (II) Late fee (a) Central tax (b) State / UT tax

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7. Refund claimed from electronic cash ledger

Description Tax Interest Penalty Fee Other Debit Entry Nos. 1 2 3 4 5 6 7

(a) Integrated Tax (b) Central Tax (c) State/UT Tax

Bank Account Details (Drop Down)

8. Debit entries in electronic cash ledger for TDS/interest payment [to be populated after payment of tax and submissions of return]

Description Tax paid in cash Interest Late fee

1 2 3 4 (b) Integrated Tax (b) Central Tax (c) State/UT Tax

Verification

I hereby solemnly affirm and declare that the information given herein above is true and correct to the best of my knowledge and belief and nothing has been concealed therefrom.

Signature of Authorized Signatory ……………………………

Place: Name of Authorized Signatory ….……………………

Date: Designation /Status……………………………………

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Instructions –

1. Terms used: a. GSTIN: Goods and Services Tax Identification Number

b. TDS: Tax Deducted at Source

2. Table 3 to capture details of tax deducted.

3. Table 4 will contain amendment of information provided in earlier tax periods.

4. Return cannot be filed without full payment of liability.

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Form GSTR 7A

[See Rule ----]

Tax Deduction at Source Certificate 1. TDS Certificate No. –

2. GSTIN of deductor – 3. Name of deductor – 4. GSTIN of deductee– 5. (a) Legal name of the deductee - (b) Trade name, if any – 6. Tax period in which tax deducted and accounted for in GSTR-7 –

7. Amount of tax deducted -

Note – The certificate is generated on the basis of information furnished by deductor in return filed in Form GSTR-7.

Amount of Tax deducted at source (Rs.) Integrated

Tax Central Tax State /UT

Tax