Understanding GST TDS Guidelines: Key Highlights from Circular No. 65/39/2018-DOR

02March

Understanding GST TDS Guidelines: Key Highlights from Circular No. 65/39/2018-DOR

<p><a href="https://cms.plasament.com/storage/nisha/circular-no65-new.pdf">circular_no.65-new</a><br><a href="https://cms.plasament.com/storage/nisha/circular-no65-new.pdf">circular_no.65-new</a><br>Introduction</p><p class="whitespace-pre-wrap break-words">The Government of India's Ministry of Finance issued Circular No. 65/39/2018-DOR dated September 14, 2018, providing comprehensive guidelines for the deduction and deposit of Tax Deducted at Source (TDS) under the Goods and Services Tax (GST) regime. This circular, which came into effect on October 1, 2018, outlines crucial procedures for Drawing and Disbursing Officers (DDOs) across government departments. Here's what you need to know.</p><h2 class="text-xl font-bold text-text-200 mt-1 -mb-0.5">What is GST TDS?</h2><p class="whitespace-pre-wrap break-words">Under Section 51 of the CGST Act 2017, Government Agencies (Deductors) are required to deduct tax from payments made to suppliers (Deductees) of taxable goods or services where the total value of such supply under a contract exceeds ₹2,50,000. The deducted amount must be paid to the Government within ten days after the end of the month in which the deduction is made.</p><h2 class="text-xl font-bold text-text-200 mt-1 -mb-0.5">Key Requirements for Deductors</h2><ol class="[&:not(:last-child)_ul]:pb-1 [&:not(:last-child)_ol]:pb-1 list-decimal space-y-1.5 pl-7"><li class="whitespace-normal break-words"><strong>Registration Requirement</strong>: All DDOs acting as deductors must register on the GST portal and obtain a GST Identification Number (GSTIN).</li><li class="whitespace-normal break-words"><strong>Deduction Rate</strong>: 2% of the payment amount (1% CGST + 1% SGST/UTGST, or 2% IGST).</li><li class="whitespace-normal break-words"><strong>Return Filing</strong>: Deductors must file monthly returns in FORM GSTR-7 by the 10th of the following month.</li><li class="whitespace-normal break-words"><strong>Certificate Issuance</strong>: A TDS certificate in FORM GSTR-7A must be issued to the deductee after filing the monthly return.</li></ol><h2 class="text-xl font-bold text-text-200 mt-1 -mb-0.5">Payment Process Options</h2><p class="whitespace-pre-wrap break-words">The circular provides two options for the payment process:</p><h3 class="text-lg font-bold text-text-200 mt-1 -mb-1.5">Option I: Individual Bill-wise Deduction and Deposit</h3><p class="whitespace-pre-wrap break-words">This process involves:</p><ol class="[&:not(:last-child)_ul]:pb-1 [&:not(:last-child)_ol]:pb-1 list-decimal space-y-1.5 pl-7"><li class="whitespace-normal break-words">The DDO prepares bills based on Expenditure Sanction, which includes total amount, net payable amount, and 2% TDS.</li><li class="whitespace-normal break-words">The DDO logs into the GST portal using their GSTIN to generate a CPIN (Challan).</li><li class="whitespace-normal break-words">Payment mode selection: Either NEFT/RTGS (with RBI as beneficiary) or Over-The-Counter (OTC) through authorized banks.</li><li class="whitespace-normal break-words">Upon successful payment, a Challan Identification Number (CIN) is generated and credited to the DDO's electronic Cash Ledger.</li></ol><p class="whitespace-pre-wrap break-words">This option is suitable for DDOs who process a limited number of payments monthly.</p><h3 class="text-lg font-bold text-text-200 mt-1 -mb-1.5">Option II: Bunching of Deductions and Periodic Deposit</h3><p class="whitespace-pre-wrap break-words">For DDOs handling numerous payments, this option allows:</p><ol class="[&:not(:last-child)_ul]:pb-1 [&:not(:last-child)_ol]:pb-1 list-decimal space-y-1.5 pl-7"><li class="whitespace-normal break-words">Deducting TDS from each bill but keeping it under a Suspense Head (8658 - Suspense; 00.101 - PAO Suspense; xx – GST TDS).</li><li class="whitespace-normal break-words">Depositing the accumulated amount on a weekly, monthly, or other periodic basis.</li><li class="whitespace-normal break-words">When ready to deposit, the DDO prepares a CPIN on the GST portal for the total amount and follows the payment process similar to Option I.</li><li class="whitespace-normal break-words">The DDO must maintain detailed records of all TDS deductions to reference when preparing the bunched payment.</li></ol><h2 class="text-xl font-bold text-text-200 mt-1 -mb-0.5">Record-Keeping Requirements</h2><p class="whitespace-pre-wrap break-words">DDOs must maintain a register (format provided in Annexure A of the circular) containing:</p><ul class="[&:not(:last-child)_ul]:pb-1 [&:not(:last-child)_ol]:pb-1 list-disc space-y-1.5 pl-7"><li class="whitespace-normal break-words">GSTIN of the Deductee</li><li class="whitespace-normal break-words">Trade Name</li><li class="whitespace-normal break-words">Amount paid to the Deductee on which tax is deducted</li><li class="whitespace-normal break-words">Tax amounts (Integrated Tax, Central Tax, State/UT Tax)</li></ul>

Understanding GST TDS Guidelines: Key Highlights from Circular No. 65/39/2018-DOR

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