Works Contracts and Tax Deduction at Source (TDS) under GST.
FIN-CT1-TAX-0045-2017-21985/F Dated:- 22-7-2017 Orissa SGST – Circular
GST – States
GOVERNMENT OF ODISHA
FINANCE DEPARTMENT
Memo No. FIN-CT1-TAX-0045-2017-21985/F
The 22nd July, 2017
To
All Departments of Government/
All Heads of Department
Sub: Works Contracts and Tax Deduction at Source (TDS) under GST.
The Goods and Services Tax has come into force w.ef 1st July, 2017. Central Taxes like Central Excise Duty, Service Tax, Additional Duties of Excise, Additional Duties of Excise (Textile and Textile products), Special Duties of Customs etc. and State taxes like VAT, Entry Tax, CST, Entertainment Tax etc. are subsumed in GST. GST has two components; Central GST (C
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r establishment of the Central Government or State Government; or
(b) Local authority; or
(c) Government agencies; or
(d) Such persons or category of persons as may be notified by the Government on the recommendations of Council,
(hereafter in this section referred to as the “deductor”), to deduct at the rate of one percent 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:”
3. The person in charge of making payment (DDO) is required to be registered under OGST Act or CGST Act. He is to apply in FORM GST REG-7 for registration through GSTN port
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furnish a return in FORM GSTR-7 within ten days in the succeeding month. Failure to file return within the stipulated date attracts interest @ 18% on the amount of tax deducted.
5. The TDS has been deferred by two months, but DDOs should be registered by 31st August 2017. The Departments are advised to instruct their DDOs to take registration by 31st August, 2017, The deductor may be instructed that if the invoice has been issued prior to 1st July, 2017 and payment is made after 1st July, 2017, no deduction under GST shall be made upto 31.08.2017.
6. Under GST, works contract is a Composite service, taxable at 18% (CGST 9% + SGST 9%). The works contractor will avail Input Tax Credit (ITC) on the inputs used for execution of works contract
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