A significant change has been introduced under Notification No. 25/2024-Central Tax requiring the deduction of TDS under Section 51 of the CGST Act, 2017, on transactions involving metal scrap. This compliance requirement applies to registered persons receiving supplies of metal scrap, specifically those classified under Chapters 72 to 81 of the Customs Tariff Act, 1975.
Key Highlights of the Change
TDS Deduction Applicability
- Who is Affected? Any registered person receiving supplies of metal scrap from another registered person, classified under Chapters 72-81 of the Customs Tariff Act, must deduct TDS as per Section 51 of the CGST Act.
Challenges Faced by Taxpayers
Following the introduction of this notification, several taxpayers have faced issues when attempting to file TDS returns for October 2024. The main reason for this difficulty was that many taxpayers who applied for GST registration in October 2024 did not have their registration approved until November 2024. The GSTN system does not allow filing returns for months before registration approval, leading to issues in reporting TDS for October 2024.
Resolution for Affected Taxpayers
To resolve this issue, the government has provided clear guidance:
Consolidated Reporting: Taxpayers who were granted GST registration in November 2024, but deducted TDS for the period from 10th October 2024 to 30th November 2024, are required to report the total TDS deducted for this period in their GSTR-7 return for November 2024.
Filing the Return: Taxpayers must ensure they file their GSTR-7 for November 2024 by the standard due date, 10th December 2024, to avoid penalties for non-compliance.
Step-by-Step Compliance Procedure
Here’s a simplified guide for taxpayers to ensure full compliance:
Confirm GST Registration Approval:
Ensure your GST registration is approved. If approved in November 2024, proceed to report TDS for both October and November 2024.Consolidate TDS Amounts:
Review your records and calculate the total TDS deducted from 10th October 2024 to 30th November 2024.File GSTR-7 for November 2024:
- Log into the GST portal and select the GSTR-7 return for November 2024.
- Report the total TDS amount for the period mentioned above.
- Verify all details and submit the return by the due date (10th December 2024).
Compliance Summary
| Action | Details |
|---|---|
| Effective Date | 10th October 2024 |
| TDS Applicability | Supplies of metal scrap (Chapters 72-81) between registered persons |
| Reporting Period | 10.10.2024 to 30.11.2024 |
| Return Form | GSTR-7 |
| Filing Deadline | 10th December 2024 |
Key Considerations for Compliance
To ensure seamless compliance, it is crucial for taxpayers to:
Accurately Consolidate TDS Data:
Report the consolidated TDS amount for October and November 2024 in the November 2024 GSTR-7 return to ensure complete and correct reporting.Timely Filing of GSTR-7:
The GSTR-7 return for November 2024 must be filed by 10th December 2024. This will help avoid penalties or interest for late filing.Maintain Proper Documentation:
Ensure that all supporting records for TDS deductions are properly maintained, as these may be required for future audits or verifications.
Conclusion
With the introduction of Notification No. 25/2024-Central Tax, the government has mandated TDS deductions on metal scrap transactions between registered persons, effective from 10th October 2024. The provided clarification ensures that taxpayers who faced delays in their GST registration approvals in October 2024 will not face penalties for filing delays. By consolidating the TDS deducted during October-November 2024 in the November 2024 GSTR-7 return, taxpayers can ensure full compliance and avoid penalties. Adhering to these guidelines will ensure smooth operations and regulatory compliance moving forward.
