Under the Goods and Services Tax (GST) framework, deductors play a crucial role in ensuring smooth tax compliance. Many government departments, local authorities, and notified bodies are responsible for deducting TDS in GST when making payments to suppliers. To remain compliant, it is essential to understand the duties of deductor under GST.
Who is a Deductor in GST?
A deductor in GST is a person or entity notified by the government, such as government departments, local authorities, and agencies, that must deduct tax at source before making payments to suppliers. These deductors ensure that a part of the tax reaches the government directly.
Duties of Deductor under GST
The main duties of deductor under GST include the following:
1. Deduct Tax at Source
The deductor must deduct 2% TDS (1% CGST + 1% SGST or 2% IGST) while making payments to suppliers, provided the contract value exceeds ₹2.5 lakh.
2. Deposit the TDS with Government
After deduction, the amount should be deposited with the government within 10 days after the end of the month in which the deduction was made.
3. File TDS Returns
The deductor is required to file Form GSTR-7 every month to report the details of TDS deducted. Filing on time avoids penalties and late fees.
4. Issue TDS Certificate
Another important duty is to issue a TDS certificate (Form GSTR-7A) to the supplier within five days of filing the return. This allows suppliers to claim the deducted amount as credit.
5. Maintain Proper Records
Deductors must maintain records of all contracts, payments, and deductions to ensure smooth audits and compliance under GST law.
Why Duties of Deductor in GST Are Important
Fulfilling the duties of deductor under GST ensures:
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Transparency in the flow of funds.
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Smooth availability of input tax credit to suppliers.
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Reduction in chances of tax evasion.
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Proper functioning of the GST system.
Conclusion
The duties of deductor under GST are not just about deducting tax but also about depositing it on time, filing returns, and issuing certificates. Compliance with these responsibilities strengthens the GST framework and avoids penalties.
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