Guidelines for Deductions Deposits of TDS by DDOs Under GST Law

As a DDO (Drawing and Disbursing Officer), it is crucial to adhere to the guidelines for deductions and deposits of TDS (Tax Deducted at Source) under GST (Goods and Service Tax) law. Not complying with these guidelines can result in penalties and legal consequences.

What is TDS and its applicability under GST?

TDS is a system in which tax is deducted at the source of income. In the case of GST, TDS is applicable to the supply of goods or services by a supplier to a recipient. As per the GST law, TDS is applicable to specified taxpayers like government departments, local authorities, and other notified entities. The TDS rate under GST is 2% on the value of supply.

Guidelines for deductions of TDS by DDOs

DDOs must follow the following guidelines for deducting TDS under GST law:

Verify whether the supplier is registered under GST and whether the invoice provided by the supplier contains all the required details, including GSTIN (Goods and Service Tax Identification Number), HSN (Harmonized System of Nomenclature) code, etc.
Deduct TDS at the rate of 2% on the value of supply (excluding GST) at the time of payment to the supplier.
Generate a TDS certificate in Form GSTR-7A and issue it to the supplier within 5 days from the date of depositing TDS.
File the TDS return in Form GSTR-7 within 10 days from the end of the month in which TDS was deducted.

Guidelines for deposits of TDS by DDOs

DDOs must follow the following guidelines for depositing TDS under GST law:

Deposit the TDS amount to the government account through challan in Form GST PMT-06 within 10 days from the end of the month in which TDS was deducted.
Generate a receipt of the TDS deposit in the Electronic Cash Ledger within the GST portal.
Ensure that the TDS amount is reflected in the electronic cash ledger of the supplier on a real-time basis.

Non-compliance and Penalties

If a DDO fails to deduct or deposit TDS within the specified time, he/she may face the following penalties:

Interest at the rate of 18% per annum from the date on which TDS was deductible to the date on which it is actually deducted.
A penalty of Rs. 10,000 or an amount equal to the TDS amount, whichever is higher, for failing to deduct TDS.
A penalty of Rs. 10,000 or an amount equal to the TDS amount, whichever is higher, for failing to deposit TDS.

It is important for DDOs to follow these guidelines to avoid penalties and legal consequences. These guidelines not only ensure compliance with the GST law but also promote transparency and accountability in the tax system.