TDS

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Tax Deducted At Source:

Notwithstanding anything contained to the contrary in this Act, the Central or a State Government may mandate, –

  1. A department or establishment of the Central or State Government, or
  2. Local authority, or
  3. Governmental agencies, or
  4. such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council,

[hereinafter referred to in this section as “the deductor”],

To deduct tax at the rate of one percent from the payment made or credited to the supplier [hereinafter referred to in this section as “the deductee”] of taxable goods and/or services notified by the Central or a State Government on the recommendations of the Council, where the total value of such supply, under a contract, exceeds five lakh rupees.

For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the tax indicated in the invoice.

When to pay TDS to government:

The amount deducted as tax under section 46 shall be paid to the account of the appropriate Government by the deductor within ten days after the end of the month in which such deduction is made, in the manner prescribed.

The deductor shall, in the manner prescribed, furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the appropriate Government and such particulars as may be prescribed in this behalf.

Obligation of the deductor:

TDS Deductor will account for such TDS in the following ways:

  1. Such deductors needs to get compulsorily registered under section 19 read with Schedule III of MGL.
  2. They need to remit such TDS collected by the 10th day of the month succeeding the month in which TDS was collected and reported in GSTR 7.
  3. The amount deposited as TDS will be reflected in the electronic cash ledger of the supplier.
  4. They need to issue certificate of such TDS to the deductee within 5 days of deducting TDS failing which fees of Rs. 100 per day subject to maximum of Rs. 5000/- will be payable by such deductor.

Penal consequences of deductor:

If any deductor fails:-

  1. To furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the appropriate Government,
  2. The deductor shall be liable to pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of the five day period until the failure is rectified:
    The amount of fee payable under this sub-section shall not exceed five thousand rupees.

  3. To pay to the account of the appropriate Government the amount deducted as tax under sub-section (1)

The deductor shall be liable to pay interest in accordance with the provisions of sub-section (1) of section 45, in addition to the amount of tax deducted.

Right of deductee:

Any amount shown as TDS will be reflected in the electronic cash ledger of the concern supplier. He can utilize this amount towards discharging his liability towards tax interest fees and any other payment. The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of section 34, in the manner prescribed.

Refund of TDS to deductee or deductor:

Refund to the deductor or the deductee, as the case may be, arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 48:
PROVIDED that no refund to deductor shall be granted if the amount deducted has been credited to the electronic cash ledger of the deductee.

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