Sagar Patel
(Tax and Business Consultant)
(11611 Points)
Replied 03 August 2020
As per provisions of section 51 of CGST Act, 2017 read with Section 20 of IGST Act, 2017, deductor is required to deduct TDS at prescribed rates as CGST and SGST/UTGST (in case of intra-state) and as IGST (in case of inter-state) on the payment made or credited to supplier w.r.t. procurement of taxable goods or services.
In terms of provisions of section 22 of CGST Act read with notification issued under IGST Act, the person, who is making intra / inter-state taxable supply and having an aggregate turnover upto prescribed limit computed on PAN India basis, has been exempted from obtaining registration.
Further, on conjoint reading of Section 2(78) and 2(47) of CGST Act, 2017, supply made by aforesaid person would accordingly construe as non-taxable supply and
same would be considered as exempt supply.
In view of the above provisions, it can be said that the TDS provisions will not be
applicable on exempt supply i.e. procurement made from unregistered supplier.
In addition, as per GSTR FORM -07 (TDS return), GSTIN of deductee is required
to be provided since tax deducted would reflect into the electronic cash ledger of
said deductee onto GSTN Portal. However, in case of unregistered supplier, the said
mechanism would not work and there may unnecessarily accumulation for such
small dealers which would have to be claimed as refund by them. This would seem to be against the policy intention of the Government.
On a conspectus of the above, it may be reasonably construed that TDS provisions
will not be applicable either on intra-state or inter-state procurement made from
unregistered supplier.
So, in our opinion there is no requirement to deduct TDS on payment made to unregistered suppliers.
Further the Law Committee, GST Council has also clarified in the Standard Operating Procedure (SOP) issued by dated 28/09/2018 that no TDS is required to be deducted
“where the payment is made to an unregistered dealer”.
Reference: Para 4 (l) at Page No.10.
So, As per above explanation
Unregistered person turnover below Limit is not mandatorily required to register (As TDS provision is not applicable to URP) except made inter state Supplies ect....
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