Are you familiar with the applicability and registration requirements for GSTR-7? This article will provide you with all the information you need to know. From understanding the purpose of GSTR-7, which deals with tax deduction at source (TDS), to learning who needs to register for it, we have got you covered. Stay tuned to gain insights into the critical aspects of GSTR-7 and ensure compliance with the tax regulations. Get ready to navigate the complexities of GSTR-7 effortlessly and avoid any potential hassles.
What is GSTR-7?
GSTR-7 is a GST return designed for individuals or entities obligated to deduct Tax Deducted at Source (TDS) under the GST regime. This return encompasses comprehensive information concerning the TDS amounts that have been deducted.
Relation between GST and TDS
According to the Central GST (CGST) Act, entities under the notification must deduct TDS at 1% on payments exceeding Rs 2.5 lakh for goods or services supplied. Additionally, states are authorised to impose a 1% TDS under their respective state laws.
In the e-commerce sector, companies must collect up to 1% TCS when paying suppliers under the Goods and Services Tax (GST). States also have the authority to impose up to 1% TCS under their State GST (SGST) laws.
Who can deduct TDS under GST?
- Departments or establishments of the Central or State government.
- Local authorities.
- Governmental agencies.
- Persons or categories of persons as recommended by the GST Council and notified by the Central or State government.
Under Notification No. 33/2017 – Central Tax, dated 15 September 2017, the following entities are authorised to deduct TDS under GST:
- An entity established by the Parliament, a State Legislature, or a government where the government holds a controlling stake of 51% or more
- Societies registered under the Societies Registration Act of 1860 and established by the Central or any state government or local authority
- Public sector undertakings (PSUs)
Importance of GSTR-7
GSTR-7 provides a comprehensive overview of the TDS (Tax Deducted at Source) deductions, including the deducted and payable amounts and any TDS refunds claimed. The individual or business for whom TDS has been deducted, known as the deductee, can claim this TDS as Input Tax Credit (ITC) and apply it towards covering their output tax liability.
The details of TDS deductions are electronically accessible to deductees in PART ‘C’ of Form GSTR-2A after the deadline for filing Form GSTR-7 has passed. Furthermore, the certificate acknowledging the TDS deductions, known as Form GSTR-7A, will be provided based on the information submitted in the GSTR-7 return.
Why File GSTR-7?
GSTR-7 is a comprehensive record that contains information about the TDS (Tax Deducted at Source) deductions, including the amounts deducted, paid, and outstanding. It also includes any TDS refunds that have been claimed. Using the data from GSTR-7, a Tax Deduction Certificate is generated in Form GSTR-7A, which is accessible to the deductee via the common portal. The deductee can utilise this TDS as input credit to offset their output tax liability.
Registration Requirements for filing form GSTR-7
- Register as a Tax Deductor and possess a valid/active GSTIN.
- Have a valid User ID and password for GST portal access.
- Maintain an active, non-expired, or non-revoked digital signature (DSC) if filing the return through DSC.
- Ensure payment has been made or the amount has been credited to the supplier’s account.
Modes of Signing GSTR-7
Digital Signature Certificate (DSC)
Digital Signature Certificates (DSC) serve as electronic equivalents to physical certificates. These digital certificates are used electronically to establish one’s identity, access online information or services, and digitally sign documents. In India, authorised Certifying Authorities issue DSCs, and the GST Portal exclusively accepts PAN-based DSCs.
Electronic Verification Code (EVC):
The Electronic Verification Code (EVC) is a security measure to verify the user’s identity on the GST Portal. It functions by generating a one-time password (OTP) that is sent to the registered mobile phone number of the Authorized Signatory, as provided in Part A of the Registration Application.
Also Read: GSTR-5: Everything You Need To Know
Where to file GSTR-7
- Go to the GST Portal.
- Log in to the GST Portal with your username and password.
- Go to the Services > Returns > Returns Dashboard command once you’re in the portal.
- You can also access the Returns Dashboard by going to the main dashboard and clicking the “Returns Dashboard” link for convenience.
What happens after filing GSTR-7?
After filing Form GSTR-7:
- An ARN (Acknowledgment Reference Number) is generated to confirm the successful filing of Form GSTR-7 Return.
- SMS and email notifications are sent to the applicant or TDS deductor on their registered mobile and email address.
- The details presented in Table 3 and Table 4 are shared with the deductee (the counterparty), who can take action by either accepting or rejecting the information.
- The return will be accessible in the Dashboard of the tax officer for viewing and processing.
Per the Companies (GST) Rules, any company registered with the Registrar under the Companies Act 2013 must file their GST returns online. This return, GSTR-7, provides comprehensive information on TDS deductions made under the GST regime. The individual or business entity for whom TDS has been deducted, known as the deductee, can claim this TDS as input credit and apply it towards covering their output tax liability.
GSTR-7 is an essential document for a company that is registered for GST. The information in GSTR-7 will help you understand how much TDS has been deducted under the GST regime and for what products and services. You can also use GSTR-7 information to determine if you are eligible for Input Tax Credit or are due a government refund.
Frequently Asked Questions(FAQs)
Is it necessary to submit Form GSTR-7 even if there has been no TDS deduction during the tax period?
It is mandatory to file GSTR-7, even if you file a nil return.
How can I satisfy my TDS liability efficiently?
TDS liability can only be settled using the Electronic Cash Ledger when filing your return.
Can I preview Form GSTR-7 before submission?
You can review a draft of Form GSTR-7 by selecting ‘Preview Draft GSTR 7’ before initiating.