GST TDS return (GSTR-7) related

[milan bamal]

1. I provide exempted services to a government department (Municipal Corporation)

2. Sanitation Services

3. But, by mistake government department deduct TDS under GST, Which should not have been deducted because it is an exempted service supply

4. As far as I know, TDS in GST is deducted on taxable supply

5. They have not corrected it yet in the GST TDS return (GSTR-7)

6. So, what is the solution for that

[Sadanand Bulbule]

You are absolutely right.

Inform the Municipal Corporation that sanitation services are exempt vide Entry No.3 of Notification No. 12/2017-Central Tax (Rate) and request them to file an amendment in their next GSTR-7 to rectify the error.

If they do not amend it, you can simply accept the credit in your portal and file Form GST RFD-01 to claim a refund of the excess balance from your Electronic Cash Ledger.

[Vijay kumar]

As per Sn.51(8), if there is an erroneous / excess deduction, refund can be claimed. If the TDS amount is credited to your account, refund can be granted to you only. You may accept the TDS credit and file refund.

Sn.51(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.

[Shilpi Jain]

If you are not able to use it then accept and file refund. Else accept and use it.

Also have a communication in place that this has been deducted by error by the Govt dept so that in future if dept questions why you have not paid GST on this transaction, you have material to prove it is not liable and was deducted by error.

AI Summary

GST TDS erroneous deduction: request GSTR-7 amendment or accept credit and claim refund via GST refund procedure. Supplier to a municipal corporation received erroneous GST TDS on exempt sanitation services; advised remedies are to request the deductor to amend its GSTR-7 or, if unamended, accept the TDS credit and file Form GST RFD-01 to claim refund from the electronic cash ledger, and retain communication from the deductor confirming the deduction was by error.