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GST TDS Rates (2023 Applicability)

Are you looking for the latest GST TDS rates with simple and crisp information? 

If you are struggling to get relevant information regarding TDS, TCS, and processes, then this article is for you.

Let’s get started!

GST TDS rates (Basics, Procedure, and Applicability)

TDS is a tax that gets deducted when the buyer of goods or services (such as government departments) makes payments under a business contract.

TDS stands for tax deduction at source. In Income Tax law, TDS is present and came into effect on 1st October 2018

The provision which pertains to TDS under GST is mentioned under Section 51 of the CGST Act to be read with CGST Rule 66.

The rate of TDS is 2% on the payments made to the seller of taxable goods or services which is notified under the GST laws. 

TDS under GST is applicable to the following:

  • A department or an establishment of the Central Government or State Government; or
  • Local authority; or
  • Governmental agencies; or
  • Such persons or categories of persons, are notified by the Government.
  • Public sector undertakings, or
  • A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860, or
  • An authority or a board or any other body which has been set up by Parliament or a State Legislature or by a government, with 51% equity (control) owned by the government.

How do I calculate GST TDS?

Generally, TDS is to be deducted at a rate of 2% on payments made to suppliers of taxable goods and/or services if the value of the total supply exceeds Rs. 2,50,000 per contract.

TDS Under GST With Example:

  1. TDS to be calculated on taxable value = Rs. 1,00,000/-
  2. TDS rate in GST = 1% (CGST) and 1% (SGST)
  3. The calculation to be made excludes the tax amount (Rs. 1,28,000 (-) Rs. 28,000)
  4. In the given example TDS calculation would work out to be.

What is the TDS rate for 2022-23?

The complete list of TDS rates for 2022-2023 is attached below. 

TDS rate for 2022-2023

Is TDS applicable on the GST component?

The value on which TDS shall be made by the recipient shall be the value excluding the CGST, SGST, or UTGST, as per the Explanation to Section 51 (1). 

As a result, TDS shall be made on a value excluding the GST amount as indicated in the invoice or other document.

Here’s a list of the items on which GST applies along with provisions of TDS under income tax:

items on which GST applies along with provisions of TDS
  • TDS would NOT be deducted from the service tax component if the amount of service tax is shown separately in the invoice. 
  • As per circular No 1/2014 (issued by CBDT), TDS had to be deducted from the amount paid/payable without including the service tax component. 
  • After GST was implemented, CBDT received many queries on TDS on services and treatment of the GST component.
  • If GST on services has been indicated separately in the invoice, then no tax would be deducted from the GST component this is clarified by CBDT through Circular No. 23/2017. GST includes CGST, SGST, IGST, and UTGST.
  • There are certain payments as mentioned above, such as technical services which attract GST (18%) and which also attract TDS under Section 194J of the IT Act. 

What is TDS return in GST?

Any erroneous amount deducted and paid to the government account shall be dealt for refund under section 54 of the CGST Act, 2017

TDS return filing is necessary for all who fall under the tax slab as prescribed by the IT Department. 

E-filing of the TDS returns is compulsory and it can be done through the official Income Tax e-filing portal. 

GSTR-7 is a monthly return filed by individuals who deduct TDS under GST.

Every GST-registered individual who deducts TDS under GST must file Form GSTR-7 by the 10th of next month

The GSTR-7 form contains details of TDS deducted, TDS payable, TDS refund, etc.

Who is eligible for GST TDS?

Tax will be deducted at the prescribed rate if the total value of the supply of taxable goods or services or both exceeds Rs. 2,50,000. 

Hence the eligibility limit is Rs. 2,50,000.

The following individuals/entities can deduct TDS as per the GST law:

  • An establishment of the Central or state government
  • A local authority
  • Governmental agencies
  • Persons or categories of persons (notified by the Central or state government) on the Council’s recommendations

Who collects TCS GST?

Tax Collected at Source (TCS) is collected by an e-commerce operator from the consideration received by it on behalf of the supplier of goods, or services. 

TCS will be calculated as a percentage of the net taxable supplies. 

A few exceptions to the TCS provisions are listed below: 

  • Hotel accommodation/clubs (unregistered suppliers) 
  • Transportation of passengers – radio taxi, motorcycle 
  • Housekeeping services like plumbing, carpentry, etc. (unregistered suppliers)

How is TCS calculated in GST?

The following example below explains the TCS and GST calculation procedure.

For example: If the TCS base amount was 10,000.00 in advance payment and the line amount is 20,000.00 on the sales invoice, then TCS will be calculated as 10,000.00 on the sales invoice. 

Calculation of TCS is done after adjusting the TCS amount which was earlier calculated on advance payment.

Pro Tip: 

As per the Income Tax Act, of 1961, IGST will be calculated with TCS for interstate sales.

What are the new TDS and TCS rule?

Two of the most significant sources of income for the government are TDS and TCS

The government also charges penalties for late payments. That’s why it is crucial for businesses to avoid penalties and stay compliant.

The difference between TDS and TCS and their importance for businesses are shown in the below chart:

Difference between TDS and TCS

MeaningTDS is tax deducted at source by any company or individual making a payment if the payment exceeds the thresholds mentioned under respective sections.TCS is a tax collected by the seller, at the time of sale.
Transactions CoveredTDS is applicable on interest, salaries, brokerage, professional fees, commission, purchase of goods, rent, etcTCS is applicable on the sale of timber, scrap, minerals, liquor, tendu leaves, forest produce, cars, and toll tickets.
LimitsUnder Section 194Q, TDS is applicable on the purchase of goods, if the amount exceeds Rs. 50 lakhs.Under Section 206C (1H), TCS is applicable on the sale of goods, if the amount exceeds Rs. 50 lakhs
RatesThe tax deduction rate (TDS) for the purchase of goods is 0.1% of the sum exceeding Rs. 50 lakhs.The tax collection rate (TCS) for the sale of goods is 0.1% of the sale sum exceeding Rs. 50 lakh
Time of Deduction/CollectionTDS is deducted whenever a payment is due or made, whichever is earlier.TCS is collected by the seller at the time of sale.
Person ResponsibleTDS is to be deducted by the individual (or company) making the payment.TCS is to be collected by the individual (or company) selling the specified goods
Due DatesThe due date is the 7th of every month for depositing TDS while TDS returns have to be submitted quarterly.TCS will be deducted during the month in which the supply is made. It will be deposited within 10 days from the end of the month of supply to the credit of the government.
Filing of Quarterly StatementsThere are three different returns to be filed for TDS – Form 24Q (on salaries), Form 26Q (other than salaries), and Form 27Q (payments made to NRIs).

There is one quarterly return in Form 27EQ for collection of tax at source (TCS).
Unavailability of PANAs per sec 206 AA, those who fail to provide Permanent Account Number (PAN) to the person making the payment will be charged TDS at the following rate, whichever is higher:
· rate specified in the corresponding provision of the Act;
· rate of 20%.

Section 206CC requires anyone paying an amount liable to TCS to provide their (PAN) to the person responsible for collecting the tax (hereafter, referred to as the collector); otherwise, the tax will be collected at the following rate, whichever is higher:
twice the rate specified in the corresponding provision of this Act;· rate of 5%

TDS Rate Chart For FY 2022-2023

Frequently Asked Questions:-

Who is the owner of GST?

The current chairman of the GST Council Nirmala Sitaraman is the current Finance Minister.

GST is imposed by the Central Government on transactions within a single state and by the State Governments on transactions within a single state. 

Central Government levies an Integrated GST (IGST) for inter-state transactions and imported goods or services.

Who can file GSTR 8?

E-commerce operators registered under GST for TCS collection must file GSTR-8 as part of their GST returns. 

Details for GSTR-8 filing required are like the amount of tax collected at source from e-commerce sellers and their GSTIN.

Who can claim TCS refund?

In both cases in which the buyer has taxable income or not, TCS is refundable.

The buyer can claim TCS refund. It is true that the tax collected at the source by the seller (paid by the buyer) is in the form of tax, which the buyer can adjust against its tax liability.

TCS will be charged if the amount being remitted in a financial year crosses Rs. 7 Lac at the PAN level.

What is the TCS tax in GST?

Tax Collected at Source (TCS) is the tax collected by the seller at the time of sell of goods and services. For Example:

If a buyer is purchasing a Van that costs Rs 10.01 lakhs then an amount of Rs 10,010 would be payable as TCS. This amount would need to be submitted to a particular bank branch authorized to collect such payments by the government.

Is TCS refundable?

The amount of tax received in form of TCS can be adjusted against your overall tax liability.

At the time of return filing, it can be claimed as an income tax refund or a credit that can be availed.

Can we charge TCS on the invoice?

Under section 206C(1H), there is no separate provision for TCS. 

The invoice value should be reported inclusive of TCS when generating the Invoice Reference Number.

What is GST 3B form?

The GSTR-3B is a simplified summary return that gives taxpayers the opportunity to declare and discharge their GST liabilities for a particular tax period.

For every tax period, a normal taxpayer is required to file Form GSTR-3B returns.

Who is exempt from GST TDS?

Businesses with an annual turnover of fewer than 40 lakhs are recognized as GST-exempted businesses.

If the Location of the Recipient is different from the Location of the Supplier and the Place of Supply, then TDS on GST would not be applicable.

What is the housekeeping services TDS rate?

Housekeeping, A/C Maintenance etc TDS rate under section 194C is 2%

How much is GST TDS on government contracts?

If the total value of taxable goods and/or services provided under a single contract is Rs. 2,50,000, TDS shall be deducted from the payment to the supplier at a rate of 2%.

What is TDS rate on hotel stay?

In India, the TDS rate for a hotel stay is 10% of the total cost of the stay if the total cost of the hotel stay exceeds INR 7,500 per night. These prices apply to both domestic and international visitors.

Wrapping Up

Hopefully, you have found all the answers on GST TDS rates (Basics, Procedure, and Applicability)

We would be pleased to hear about your experience and any further queries.

Also, Read

What Are The Current GST Rates In India? (Complete List)

New GST Rates In India 2023 (Item Wise and HSN Code)

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