Tax Deduction at Source under GST- An Additional Nuisance

• September 26, 2020
• CA Chandan Agarwal's Office

Background

Tax deduction at source (‘TDS’) mechanism was initially introduced under direct tax laws i.e. income tax laws. It is a way of tax collection wherein certain portion of amount is deducted by the person paying the consideration to the supplier. Basically, it provides for the sharing of responsibility of tax collection by tax department and deductors, which in turn ensures regular inflows to the Government and prevents tax evasion. Under indirect tax laws, concept of tax deduction could be traced in erstwhile State level VAT enactments also. Now, post GST implementation, the concept has also been made applicable effective from October 01, 2018 which is in addition to obligation of deduction of tax at source under direct tax laws.

Who to make TDS [S. 51(1) of CGST Act]

Following persons, as notified (collectively referred to as ‘Deductors’) may be required to make TDS;

1. A department or establishment of Central Government or State Government; or

2. Local authority; or

3. Governmental agencies; or

4. Such person or category of persons as may be notified, by the Central Government or a State Government on the recommendation of GST Council.

Read more on: https://taxguru.in/goods-and-service-tax/tax-deduction-source-gst-additional-nuisance.html