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?
Persons notified by the government.
Department or establishment under central or state governments.
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