TDS (Tax Deducted at Source) Under GST

In this article, we will be discussing in detail TDS, who is liable to pay it, and who is tasked with collecting it. There has been an update on this topic. Please find the link to that article below.

What is TDS under GST?

TDS or tax deducted at the source is a revenue stream for the government. It is a type of tax that is deducted directly from the source of income generation. Technically, a fixed percentage of the amount is deducted by a recipient at the time of making payment to the supplier and the payment deducted will directly go to the government.

TDS to be deducted is currently 2% of the amount, which includes 1% CGST and 1% SGST or UGST.

Requirements for TDS deductors?

A person who is liable to deduct TDS has to mandatory register himself/herself. After registration, the Tax Deduction and Collection Account Number (TAN) is assigned to everyone. This is issued under the Income-tax act.

How to decide the value on which TDS is applicable?

The amount which is liable to deduct TDS is the final amount of goods or service, on which no tax has been added further.

For example, Mr. X sold goods worth 10,000 to Mr. Y, on which GST applicable is 5%, which totals up to 10,500. So only 10,000 is eligible for TDS, which equals INR 200. (2% of 10,000)

Who is liable to deduct TDS under GST law?

1. Local authority

2. Government agency

3. Persons notified by the government.

4. Department or establishment under central or state governments.

There has been an update on this topic. Click here

Disclaimer: This article is intended for general consumption only. The information in the article was accurate at the time of publication, but it is subject to change due to changes in government rules and regulations. The contents of the blog may not be copied unless prior permission is obtained.

Our GST guidebook and experts will help you with all your Goods and Services Tax Queries. Please contact us on [phone] to know more.