Section 51

TAX DEDUCTION AT SOURCE

Section 51(1):-

Notwithstanding anything to the contrary contained in this Act, the Government may mandate,

(a) a department or establishment of the Central Government or State Government; or

(b) local authority; or

(c) Governmental agencies; or

(d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, (hereafter in this section referred to as “the deductor”),

Notification No 50/2018 Central Tax as amended from time to time along with applicable circulars

to deduct tax at the rate of one per cent

from the payment made or credited to the supplier

(hereafter in this section referred to as “the deductee”)

of taxable goods or services or both,

where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:

Provided that no deduction shall be made

if the location of the supplier and the place of supply

is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.

Explanation:-

For the purpose of deduction of tax specified above,

the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.

(2) The amount deducted as tax under this section

shall be paid to the Government

by the deductor within ten days after the end of the month

in which such deduction is made,

in such manner as may be prescribed.

(3) A certificate of tax deduction at source shall be issued

in such form and in such manner as may be prescibed.

Substituted by the Finance Act 2020, w.e.f. 1-1-2021

Earlier subsection (3) read as under

The deductor shall furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the Government and such other particulars in such manner as may be prescribed.

(4) If any deductor

fails to furnish to the deductee the certificate,

after deducting the tax at source,

within five days of crediting the amount so deducted to the Government,

the deductor shall pay, by way of a

late fee, a sum of one hundred rupees per day

from the day after the expiry of such five days period

until the failure is rectified,

subject to a maximum amount of five thousand rupees.

(5) The deductee shall claim credit,

in his electronic cash ledger,

of  the tax deducted and reflected in the return of the deductor furnished under Section 39(3)

in such manner as may be prescribed. 

Rule 87 (Point No 9) of Goods and Service Tax Rules 2017 as amended from time to time

(6) If any deductor

fails to pay to the Government

the amount deducted as tax under sub-section (1),

he shall pay interest in accordance with the provisions of sub-section 50(1),

in addition to the amount of tax deducted.

(7) The determination of the amount in default under this section shall be made in the manner specified in section 73 or section 74.

(8) The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54

Provided that no refund to the deductor shall be granted,

if the amount deducted

has been credited to the electronic cash ledger of the deductee.

Thanks

CA Rahul Gupta