The provisions for Tax Deducted at Source (TDS) under GST as specified in section 51 of the CGST Act, were initially restricted to the government entities and public sector units (PSUs). Below mentioned are the suggestions of the GST council in its 54th meeting, the Notification No. 25/2024-CT dated 9th October 2024 has been issued by the CBIC extending the scope of GST TDS to include the metal scrap sector within it.
Central Tax GST Notification No. 25/2024 Date
The revisions introduced by Notification No. 25/2024-Central Tax came into force on October 10, 2024. All the transactions on or after the same date should adhere to the updated TDS provisions under GST.
What is the Scope?
The amendment comprises registered individuals obtaining the metal scrap categorized under Chapters 72 to 81 of the Customs Tariff Act, 1975. It assures that Under GST the TDS provisions apply to a wider range of metal scrap transactions.
What About the TDS Rate?
On the transactions, a 2% TDS is obligated where the taxable value surpasses Rs 2,50,000. The breakdown of the rate is stated as:
- Intra-State Transactions: CGST (1%) + SGST (1%) = 2%
- Inter-State Transactions: IGST = 2%
Forms for Registration and GST Return Filing
- GST REG-07 form is mandatory for registration
- Time of TDS Deposit Under GST: The amount deducted since the tax will be filed to the government within 10 days post finish of the month where these deductions are incurred.
- GST Return 7 Form – Filing is to be completed by the 10th of the following month
- GSTR-7A GST Certificate Form – Certificate shall get generated automatically, similar to Form 16A under the Income Tax Act
Chapters of the Customs Tariff Act, 1975
- Chapter 72: Iron and Steel
- Chapter 73: Articles of Iron and Steel
- Chapter 74: Copper and Articles thereof
- Chapter 75: Nickel and Articles thereof
- Chapter 76: Aluminium and Articles thereof
- Chapter 78: Lead and Articles thereof
- Chapter 79: Zinc and Articles thereof
- Chapter 80: Tin and Articles thereof
- Chapter 81: Other Base Metals; Cermet’s; Articles Thereof
Effects of Non-Compliance with TDS Provisions Under GST
- Interest Allpies on Late Payment: 18% interest to be paid along with the TDS amount
- TDS Return Late Filing: As per GST Notification No. 23/2024, a late fee of INR 25 will be charged per day of failure, up to a maximum of INR 1000.
- TDS Late Fee Nil: As per GST Notification No. 23/2024, if no TDS was deducted for a given month, the late fee is completely waived.
Furthermore Points
- Per transaction, the Limit of Rs 2,50,000 is been applicable. Each transaction should be calculated individually to assess TDS liabilities.
- No TDS under GST is applied to the import of metal scrap from foreign countries.
- Suppliers have the option to use their TDS credit to settle their GST obligations or to request refunds.
- Suppliers in their cash ledger will receive TDS credits monthly.
- The transactions should be B2B that is Registered persons purchasing metal scrap from other registered persons.
- Under GST to deduct TDS the value of supply will be opted as the amount excluding the CGST, SGST/UTGST, IGST, and CESS shown in the invoice i.e., Taxable value.
- If the location of suppliers and place of supply of state are different from the state of recipients then no GST TDS is applicable.
- There is a need to deduct the TDS merely in these cases where the total value of supply as per the contract surpasses Rs 2.5 lacs. Therefore TDS must be deducted if the individual supplies are not more than 2.5 lacs when the total supply value as per the contract exceeds 2.5 lacs.
- For instance: -Mr. Rahul has entered a contract with Mr Sachin to supply metal scrap worth Rs. 18 lacs in 10 equal lots over the year. In this case, even though each individual supply is less than Rs. 2.5 lacs, Mr. Sachin is still required to deduct TDS as the contract value exceeds Rs. 2.5 lacs.
- URP to RP transactions – RCM (Reverse Charge Mechanism) is to be applied and the enrolled person being a receiver shall be obligated to file the tax under RCM.
- The provisions of GST TDS are applicable for the matter of the supply of metal scrap via a PSU/Central Govt./State Govt./local authority to another PSU/Central Govt./State Govt./local authority, not being a distinct person.
- The obligation to deduct the GST TDS emerges if the payment has been incurred or credited before the supplier and is not on the grounds of the date of purchase or invoice. Hence if the payment has been incurred on or after 10th October 2024, the same shall be perfect to deduct the GST TDS.
- Under the GST law, a distinct individual is directed to the establishment of an identical entity (branches or locations of the same legal entity in different states). The same establishments or units are not the same entities from the point of GST however it shall be required as the identical legal entity towards all the other points of view. For the matter of metal scrap purchase via another person then the provisions of GST TDS shall not be drawn as they are regarded as the same legal entity.
