Cess on rent

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binu sukumaran (Querist)
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07 May 2024 Sir.
one of my friends says that, he got rentaly payment after deduction of cess 2%.
Counter party is government department. let's me know
1. Can we can recouped this deduction cess amount.
2. Whether is need to change in bill format.
3. Is it reflected in Gstr 2B.(Whether it is reflected in cess head or other head.).
Please advise

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 In the context of rental payments made by a government department where a cess (2%) has been deducted, here are the considerations:

1. **Recouping Cess Deduction**:
- Typically, government departments or entities authorized to make deductions like cess follow regulatory guidelines. If the deduction was made in accordance with applicable laws or agreements (such as service tax or GST laws), it might be challenging to recoup the amount unless there was an error in the application of the deduction.
- Your friend should first review the legal basis for the cess deduction. If it was incorrectly applied or if there are specific exemptions that apply (such as for certain types of rental payments), they may have grounds to request a refund or adjustment.

2. **Invoice Format Changes**:
- If the deduction was due to a misunderstanding or lack of clarity in the invoice format, your friend may consider updating the bill or invoice format for future transactions. Ensure that the invoice clearly states any exemptions or conditions regarding deductions like cess to avoid misunderstandings in the future.

3. **Impact on GSTR-2B**:
- GSTR-2B is a return that shows the details of inward supplies (purchases) for a taxable person under GST. It typically includes information related to GST liabilities and input tax credit (ITC).
- Cess, if applicable, is usually reported separately from GST in GSTR-2B under its specific head. Your friend can check GSTR-2B to see if the cess deduction made by the government department is reflected correctly.
- If there are discrepancies or if the cess deduction is not correctly accounted for in GSTR-2B, your friend may need to reconcile and report it appropriately in their GST filings.

To address these issues effectively, your friend should:
- Verify the legal basis for the cess deduction.
- Discuss with the government department or entity responsible for the deduction to understand the rationale behind it.
- Ensure clarity in future invoices to prevent similar issues.
- Review their GST filings to ensure proper reporting of any deductions or liabilities, including cess.

If there are specific legal nuances or contractual terms involved, consulting a tax advisor or legal expert familiar with GST laws and government contracts could provide further guidance tailored to your friend's situation.

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