TDS on supplies by unregistered dealers under CGST Act

[Lalitha Krishnamurthy]

Is it necessary to deduct TDS under section 51 of the CGST Act when the supplier is unregistered under the said Act and the service recipient is otherwise required to deduct? If so, how will the supplier claim refund?

AI Summary

TDS Not Required Under Section 51 of CGST Act for Unregistered Suppliers; Exemptions Include Low-Value Contracts and Exempt Goods. A query was raised about whether Tax Deducted at Source (TDS) under Section 51 of the CGST Act is necessary when the supplier is unregistered. The response clarified that TDS is not required if the supplier is unregistered and not liable for GST on the transaction. Several conditions were outlined where tax deduction is not required, such as when the contract value is below 2.5 lakh or involves exempted goods or services. It was noted that there is no mechanism for unregistered suppliers to claim refunds if TDS is deducted. Further discussion questioned the binding nature of the Standard Operating Procedure for deductors.