TDS Mechanism under GST - Section 51 - GST Ready Reckoner - GST

TDS Mechanism under GST Introduction The concept of Tax Deduction at Source (TDS) was there in the erstwhile VAT Laws. GST Law also mandates Tax Deduction at Source (TDS) vide S ection 51 of the CGST/SGST Act 2017 , Section 20 of the IGST Act, 2017 and Section 21 of the UTGST Act, 2017. GST Council in its 28th meeting held on 21.07.2018 recommended the introduction of TDS from 01.10.2018. Persons liable to deduct tax under GST Law Following would be the deductors of tax in GST under section 51 of the CGST Act, 2017 read with notification No. 33/2017-Central Tax dated 15.09.2017 ( Superseded vide Notification No. 50/2018 Central Tax dated 13-09-2018 ) As per the provisions of the GST Law, the following persons are mandatorily required to deduct TDS :- (a) a department or establishment of the Central/ State Government; or (b) local authority ; or (c) Governmental agencies; or (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council. The following class of persons under section 51(1)(d) of the CGST Act, 2017 has been notified vide notification No. 33/2017 Central Tax dated 15.09.2017 ( Superseded vide Notification No. 50/2018 Central Tax dated 13-09-2018 ) :- (a) an authority or a board or any other body, (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one percent or more participation by way of equity or control, to carry out any function; (b) society established by the Central/ State Government or a Local Authority under the Societies Registration Act,1860; (c) public sector undertakings. (d) any registered person receiving supplies of metal scrap falling under Chapters 72 to 81 in the First Schedule to the Customs Tariff Act, 1975, from other registered person. [ Inserted vide Notification No. 25/2024-Central Tax dated 09.10.2024 , w.e.f. 10.10.2024 ] Nothing in this notification shall apply to Persons specified under section 51(1)(a) , the authorities under the Ministry of Defence, other than the authorities specified in the Annexure-A and their offices, with effect from the 1st day of October, 2018. The supply of goods or services or both from a public sector undertaking to another public sector undertaking, whether or not a distinct person, with effect from the 1st day of October, 2018. The supply of goods or services or both which takes place between one person to another person specified under clauses (a), (b), (c) and (d) of section 51(1) [ the supply of goods or services or both, which takes place between one person to another person specified under clauses (a), (b), (c) and (d) of section 51(1) of CGST Act, except the person referred to in clause (d) of this notification. substituted vide Notification No. 25/2024-Central Tax dated 09.10.2024 , w.e.f. 10.10.2024 ] Local authority: Section 2(69): local authority means a Panchayat as defined in clause (d) of article 243 of the Constitution; a Municipality as defined in clause (e) of article 243P of the Constitution; a Municipal Committee , a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; a Development Board constituted under article 371 of the Constitution; or a Regional Council constituted under article 371A of the Constitution. Registration of deductor of tax in GST The existing deductors of STDS/TCS under VAT Act will not be automatically migrated to GST. Section 24(vi) of the CGST Act, 2017 provides for compulsory liability for registration for the deductors of TDS. A deductor in GST will be required to get registered and obtain a GSTIN [Goods Services Tax Identification Number] as a TDS deductor even if he is separately registered as a supplier. A deductor has to get himself registered through the portal www.gst.gov.in b y using their PAN/TAN. The entire process is online. Goods or services liable for TDS TDS is required to be deducted on all taxable goods or services or both.