Applicability of GST TDS on Inter State Supply ?

By | November 12, 2018
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(Last Updated On: November 12, 2018)

 GST TDS on Inter State Supply ?

Whether TDS provisions under GST will apply in case of Inter State Supply ?

GST TDS Provision under IGST Act

As per Section 20 of IGST Act 2017  :Application of provisions of Central Goods and Services Tax Act.

20. Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act relating to,—

….

(x)tax deduction at source;
(xi)collection of tax at source;

Shallmutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act:

Provided that in the case of tax deducted at source, the deductor shall deduct tax at the rate of two per cent from the payment made or credited to the supplier.

GST TDS Provision under CGST Act

As per Provision to Section 51 of CGST Act 2017

No deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory, which is different from the State, or as the case may be, Union Territory of registration of the recipient.

 

This  statement can be explained in the following situations:

(a) Supplierplace 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.

(b) 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.

(c) 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.

Example

Location of SupplierPlace of SupplyLocation of RecipientTDS under GSTGST
PunjabPunjabPunjabApplicable CGST

Punjab GST

PunjabHaryanaHaryanaApplicableIGST
PunjabPunjabHaryanaNot ApplicableCGST

Punjab GST

PunjabHimachalHaryanaApplicableIGST
PunjabHaryanaHimachalApplicableIGST

Note : Section 7 of IGST Act 2017

Inter-State supply.

1 7. (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in

(a)two different States;
(b)two different Union territories; or
(c)a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce.

…….

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in—

(a)two different States;
(b)two different Union territories; or
(c)a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce.
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