Question 1

Who must deduct TDS under GST and at what rate?

Accepted Answer

Section 51 of the CGST Act: TDS is mandatory for: (a) central/state government departments; (b) local authorities; (c) government agencies; (d) specified entities notified by the government (includes PSUs, authorities established by statute). Rate: 2% of the taxable value (1% CGST + 1% SGST/UTGST) on contract value > ₹2.5 lakh. For inter-state supplies: 2% IGST. The deductor must register under Section 24(vi) (mandatory, turnover threshold not applicable).

Question 2

What is GSTR-7 and when must it be filed?

Accepted Answer

GSTR-7 is the return filed by the TDS deductor — monthly, by the 10th of the month following deduction. It reports: the supplier's GSTIN, the value of supply on which TDS is deducted, the TDS amount, and the TDS certificate details. On filing, the TDS credit automatically appears in the supplier's electronic cash ledger as Form GSTR-7A (the TDS certificate). The deductor must issue GSTR-7A to the supplier within 5 days of filing GSTR-7.

Question 3

When is GST TDS not deducted?

Accepted Answer

Section 51 exemptions: (a) if the supplier is registered under the composition scheme; (b) if the total supply value in a contract is ≤ ₹2.5 lakh; (c) the supply is exempt from GST; (d) the place of supply is outside India. Also: GST TDS applies only to notified deductors — private companies, individuals, and partnerships are not required to deduct GST TDS even if they are large buyers. This is different from income tax TDS which applies broadly.

Question 4

What is the penalty for non-deduction or late payment of GST TDS?

Accepted Answer

Section 122(1)(vi): failure to deduct GST TDS attracts a penalty of ₹10,000 or the amount of TDS that should have been deducted (whichever is higher). Interest at 18% p.a. on the delayed TDS amount under Section 50. Late filing of GSTR-7: ₹100/day (₹50 CGST + ₹50 SGST) up to ₹5,000. The deductor is jointly and severally liable with the supplier for the tax if TDS was not deducted.

Question 5

How does GST TDS interact with income tax TDS?

Accepted Answer

GST TDS (Section 51 CGST Act) and income tax TDS (Section 194C/194J IT Act) are independent obligations — both must be complied with where applicable. GST TDS: deducted on the supply value including GST? No — GST TDS is on the taxable value (excluding the GST component). Income tax TDS under Section 194C: deducted on the total payment (including GST) per the IT Department's position (though this is disputed — some courts hold that GST should be excluded). Both deductions must be deposited and reported in their respective returns.

Gst Tds Gstr7

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