Frequently asked questions.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore aliqua.

*All website prices include full taxes.

General Questions

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore aliqua.

Tax Deduction at Source (TDS) is a system, initially introduced by the Income Tax Department. It is one of the modes/methods to collect tax, under which, certain percentage of amount is deducted by a recipient at the time of making payment to the supplier. It is similar to the “pay as you earn” scheme also known as Withholding Tax, in many other countries.

TDS facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It also ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion and expands the tax net, as it provides for the creation of an audit trail.

Subject to fulfillment of specified conditions under respective sections, on the following list of payments TDS is attracted:

  1. Salaries

  2. EPF withdrawal

  3. Interest (other than interest on securities)

  4. Interest on securities

  5. Winnings from lottery, crossword puzzles etc.

  6. Winnings from horse races

  7. Contractor payments

  8. Commission to insurance agents

  9. Commission or brokerage

  10. Payments to Non-resident sportsman/entertainer

  11. Royatly/Fees for technical services/professional fees

  12. Rent

  13. Purchase of immovable property (other than agricultural land)

  14. Income from units of business trust & investment fund

  15. Income from investment in securitization trust

Cash withdrawals (more than Rs. 1 crore)

As per the GST law, certain notified registered persons will be required to deduct these taxes while making payments to the registered supplier. In other words, TDS under GST shall be deducted and deposited with the government.

Supplier as well as the place of supply are in different states. In such cases, Integrated tax would be levied. TDS to be deducted would be TDS (Integrated tax) and it would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.

Form 16 is the certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. In other words, Form 16 is a certificate issued by an employer evidencing the TDS which is deducted from your salary and deposited with the authorities. It contains the information you need to prepare and file your income tax return.

It is issued annually. Form 16, essentially has two components - Part A and Part B.

Part A consists of

a. Name and address of the employer

b. TAN & PAN of employer

c. PAN of the employee

d. Summary of tax deducted & deposited quarterly, which is certified by the employer.

 

Part B consists of

a. Detailed breakup of salary

b. Deductions allowed under the income tax act (under chapter VIA)

c. Relief under section 89.

The amount of tax deducted at source should be deposited to the Government account by the deductor by 10th of the succeeding month. The deductor would be liable to pay interest if the tax deducted is not deposited within the prescribed time limit.

Supplier, place of supply and recipient are in the same state. It would be intra-State supply and TDS (Central plus State tax) shall be deducted. It would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.

The reason behind introducing this system because there is a higher number of chances that a buyer or service receiver never pays tax to the government and loss to the government, hence the Indian government introduced a new process where tax collected by a seller or service provider on behalf of buyer or service receiver and pay the taxes to the government. The same rule is applicable to the employer and employees.

TCS applicable on following items:

Alcohol, Scrap, Timber, Parking, Jewelry, Cash sales/services more than Rs. 2,00,000, sales of car more than Rs. 10,00,000. Rates of tcs varies with items

Difference

Tax Deducted at Source and Tax Collected at Source! Sounds familiar right? But what are the difference?

TDS (Tax Deducted at Source)

  1. TDS implies the amount deducted from the recipient's income in the form of tax.

  2. Expense

  3. Specified expenses crosses the prescribed limit.

  4. Deducted by payer or buyer

  5. Crediting the account of the payee or during payment, whichever is earlier.

 

TCS (Tax Collected at Source)

  1. TCS refers to an amount accumulated by the seller or company as tax.

  2. Income

  3. Sale of specified items is made.

  4. Collected by payee or seller

  5. Debiting the account of the buyer or during receipt, whichever is earlier.

Tax Collection at Source (TCS) has similarities with TDS, as well as a few distinctive features. TDS refers to the tax which is deducted when the recipient of goods or services makes some payments under a contract etc, while TCS refers to the tax which is collected by the electronic commerce operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the electronic commerce operator.

Responsibility

Not everyone is responsible to deduct TDS.

The Government may order the following persons (the deductor) to deduct tax at source:

(a) A department or an establishment of the Central Government or State Government; or

(b) Local authority; or

(c) Governmental agencies; or

(d) Such persons or category of persons may be notified by the Government on the recommendations of the Council.

When both the supplier as well as the place of supply are different from that of the recipient, no tax deduction at source would be made.

For instance: Supplier as well as the place of supply are in State A and the recipient is located in State B. The supply would be intra-State supply and Central tax and State tax would be levied. In such case, transfer of TDS (Central tax + State tax of State B) to the cash ledger of the supplier (Central tax + State tax of State A) would be difficult. So in such cases, TDS would not be deducted.

An E-commerce operator has to collect TCS and has to deposit with SBI and has to file the same in its GST return. The amount of TCS deposited shall get reflected on GST portal in GST cash ledger and supplier could use this amount for discharging it’s GST liability.

An officer not below the rank of Deputy Commissioner can issue Notice to an Operator, asking him to furnish details relating to volume of the goods/services supplied, stock of goods lying in warehouses/godowns etc. The Operator is required to furnish such details within 15 working days.

Procedure

This segemnt deals with the various procedures involved in the process of TDS

A TDS deductor has to compulsorily register without any threshold limit. The deductor has a privilege of obtaining registration under GST without requiring PAN. He can obtain registration using his Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act, 1961.

The deductor is also required to file a return in Form GSTR-7 within 10 days from the end of the month. If the supplier is unregistered, name of the supplier rather than GSTIN shall be mentioned in the return. The details of tax deducted at source furnished by the deductor in FORM GSTR-7 shall be made available to each of the suppliers in Part C of FORM GSTR-2A electronically through the Common Portal and the said supplier may include the same in FORM GSTR-2. The amounts deducted by the deductor get reflected in the GSTR-2 of the supplier (deductee). The supplier can take this amount as credit in his electronic cash register and use the same for payment of tax or any other liability.

Log into your Account on the income tax website and check the details on Form 26AS.
You'll get all the details of Tax deducted and Advance Tax or Self Assessment Taxes paid if any. If you you have not yet made an account on the website then you'll need to make one.

Note: Your PAN Card number would be your User ID.

A TDS certificate is required to be issued by deductor (the person who is deducting tax) in Form GSTR-7A to the deductee (the supplier from whose payment TDS is deducted), within 5 days of crediting the amount to the Government, failing which the deductor would be liable to pay a late fee.

If the excess amount is deducted by the deductor, then the excess amount deducted will be refunded back. There are two ways by which amount can be claimed

  • If the amount is claimed by deductee in electronic cash ledger: If the deductee claims the amount in the form of electronic cash ledger then refund in such case is not possible. In such case, it is not possible to claim any deduction of TDS by the deductor.

If the amount is not claimed by the deductee: Subject to the provisions of refund and procedure of the act, refund of the excess TDS deducted is available to deductor.

The amount of tax collected by the Operator is required to be deposited by the 10th of the following month, during which such collection is made.

The Operator is also required to furnish a monthly statement in Form GSTR-8 by the 10th of the following month.

The Operator is also required to file an Annual statement in prescribed form by the 31st of December following the end of every financial year.

The Operator can rectify errors in the statements filed, if any, latest by the return to be filed for the month of September, following the end of every financial year.

The details furnished by the Operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8.

Refund and Penality

So, this part specifies consequences of some activities related to TDS

TDS not deducted: Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law

TDS certificate not issued or delayed beyond the prescribed period: Payment of late fee

TDS deducted but not paid to the Government or paid later than 10th of the succeeding month: Interest to be paid along with the TDS amount; else the amount shall be determined and recovered as per the law

Late filing of TDS returns: Late fee for every day during which such failure continues, subject to a maximum amount

Any excess or erroneous amount deducted and paid to the government account shall be dealt for refund under section 54 of the CGST Act, 2017. However, if the deducted amount is already credited to the electronic cash ledger of the supplier, the same shall not be refunded.

The tax collected by the Operator shall be credited to the cash ledger of the supplier who has supplied the goods/services through the Operator. The supplier can claim credit of the tax collected and reflected in the return by the Operator in his [supplier’s] electronic cash ledger.

The details of the supplies, including the value of supplies, submitted by every Operator in the statements will be matched with the details of supplies submitted by all such suppliers in their returns. If there is any discrepancy in the value of supplies, the same would be communicated to both. If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such suppler. The supplier will have to pay the differential amount of output tax along with interest.

In case an Operator fails to furnish the information, besides being liable for penal action under section 122, it shall also be liable for penalty up to Rs. 25,000/-

Ask Us a Question

This is just a simple text made that you can replace it.