Refund of TDS/TCS deposited in excess - GST Ready Reckoner - GST

Refund of TDS/TCS deposited in excess Refund of TDS/TCS deposited in excess [Para 55 and 56 of Circular No. 125/44/2019-GST dated 18th November, 2019 ] Tax deducted in accordance with the provisions of section 51 of the CGST Act or tax collected in accordance with the provisions of section 52 of the CGST Act is required to be paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8 , as the case may be, by the deductor or the collector, as the case may be. [ Para 55 ] It has been reported that, there are instances where taxes so deducted or collected is deposited under the wrong head (e.g. an amount deducted as Central tax is deposited as Integrated tax/State tax), thereby creating excess balance in the cash ledger of the deductor or the collector as the case may be. Doubts have been raised on the fate of this excess balance of TDS/TCS in the cash ledger of the deductor or the collector. It is clarified that such excess balance may be claimed by the tax deductor or the collector as the excess balance in electronic cash ledger. In this case, the common portal would debit the amount so claimed as refund. However, in case where tax deducted or collected in excess is also paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8 , as the case may be, and the said amount has been credited to the electronic cash ledger of the deductee, the deductee can adjust the same while discharging his output liability or he can claim refund of the same under the category refund of excess balance in the electronic cash ledger . [ Para 56 ] Whether refund of TDS/TCS deposited in electronic cash ledger under the provisions of section 51 / 52 of the CGST Act can be refunded as excess balance in cash ledger [ Circular No. 166/22/2021-GST dated 17th Nov, 2021 ] The amount deducted/collected as TDS/TCS by TDS/ TCS deductors under the provisions of section 51 / 52 of the CGST Act, as the case may be, and credited to electronic cash ledger of the registered person, is equivalent to cash deposited in electronic cash ledger. It is not mandatory for the registered person to utilise the TDS/TCS amount credited to his electronic cash ledger only for the purpose for discharging tax liability. The registered person is at full liberty to discharge his tax liability in respect of the supplies made by him during a tax period, either through debit in electronic credit ledger or through debit in electronic cash ledger, as per his choice and availability of balance in the said ledgers. Any amount, which remains unutilized in electronic cash ledger, after discharge of tax dues and other dues payable under CGST Act and rules made thereunder, can be refunded to the registered person as excess balance in electronic cash ledger in accordance with the proviso to section 54(1) , read with section 49(6) of CGST Act.