ALL About GSTR-7

TDS stands for tax deducted at source. The idea under Goods and Service Tax is relative as given under the Income Tax Act. Individuals or industries who make payments for services and goods are responsible to deduct tax at the source when the payment meets a specific limit. Under GST, Form GSTR-7 is for TDS deducted at source. Each certified taxable person who deducts TDS needs to file GSTR-7.

Every person who deducts TDS will file the arrival by the tenth of the following month from a specific tax period. GSTR-1 must be filed ignoring the filing requirement of Form GSTR-7. TDS includes a complete estimation of services and goods that exceeds Rs 2.5 Lakhs in a commercial year. The deduction rate of TDS is CGST 1% + SGST 1% and 2 % of IGST of interstate supplies.

Taxpayers also need to understand the fact that the TDS must not get deducted if the location of the area and the spot of supply are not the same as the spot of registration of the receiver.

1. Who Is Responsible for Deducting TDS Under GST?

As per section 51, here are the liabilities of the deductors who can deduct TDS under GST:

• Department of  State  Govt or Central Govt.
• Local authority
• Government offices
• An authority or a board or any other party,-
• Set up by an Act of Parliament or a State Parliament; or
• Established by any Government,

With 51%. on the other hand more investment by way of equity or control, to carry out any function; or

• A society proved by the Central Govt or the State Govt or an area Authority under the Societies Registration Act, 1860 (21 of1860); or
• public sector undertakings.

2. When One Can Deduct TDS?

The above-mentioned are ready to deduct TDS from the amount they pay to their suppliers. They only deduct the TDS when the entire value of the taxable goods or services meets Rs 2.5. lakhs. Additionally, As we have already discussed the rate in above, for intra-state supplies, TDS @ 2% is deductible where 1% speaks to CGST and 1% speaks to SGST. However, 2% speaks to IGST if there’s any inter-state supply.

Moreover, TDS additionally deductible at the time of making payment ignoring the type of payment mode used.

3. Situations for TDS Deductors

The TDS can deduct by the deductors from the installment made to the supplier under the following conditions-

• The total amount paid to a single contract should meet Rs 2.50 Lakhs. However, this is a taxable value and therefore, it excludes any taxes.
• The service provider and the receiver should be in the same state or in a union territory. Moreover, this also relates to intra-state supplies where the TDS rate should be 2% to be deducted by the deductor for IGST/CGST/SGST.
• The deductor needs to deduct 2%  TDS if the location between the recipient and the service provider is different.

4. Exemption From Deduction of TDS

In the case where “Location of Supplier” and “Place of Supply” is different from the state of registration of recipient of goods/services then the recipient is not required to deduct TDS while making payment.

Understand this case with the following example:

 5. Due Date of Form GSTR-7

The Form GSTR-7 should be filed within 10 days from the end of the month by every deductor. For example, if you deduct TDS in April 2020, you have to file the return on May 10th, 2020. 

6. ISSUE TDS CERTIFICATE IN FORM GSTR-7A TO DEDUCTEE

Once the deductor will submit all the information required in the Form GSTR-7. Then on the basis of the details provided by the deductor, the TDS certificate gets generated in the GSTR-7A return. There are some penalties if there’s a non-submission of a TDS certificate under GST.

if the deductor misses submitting the TDS certificate to the deductee will have to pay the following penalties.

1. 100 rupee per day from the date of the end of 5 days till the default continues.   the penalty is not paid more than Rs. 5,000

7. What if Form GSTR-7 is Due?

As above mentioned, the deductor has to pay late fees, penalties, and other payable amounts if there’s any delay in filing the return. There are few details mentioned below you need to know :

1. If the deductor does not deduct TDS from the service provider, he is liable to pay interest at the rate of 18%  with the TDS amount.
2. The deductor is responsible to pay Rs 200 per day in case he fails to generate the TDS certificate and that could lead to the maximum value of Rs 5,000.
3. So, the deductor has to pay a late fee along with interest and 18% per annum. The taxpayer will calculate the penalty amount and that should be paid within the given deadline.

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