Reporting TDS Deducted by Scrap Dealers: GSTN’s October 2024 Advisory

Introduction:

The GST Network (GSTN) recently issued an advisory in October 2024 detailing the process for reporting Tax Deducted at Source (TDS) by scrap dealers. This advisory aims to streamline compliance, reduce errors, and provide clear guidance to registered taxpayers under the GST regime. Proper reporting of TDS is crucial, especially in sectors like scrap trading, where tax compliance has been historically challenging.

Key Takeaways from GSTN’s Advisory

1. Applicability of TDS in Scrap Transactions:
   • Scrap dealers are required to deduct TDS under Section 51 of the GST Act when payments exceed the prescribed threshold.
   • Transactions must involve taxable supplies with GST compliance by both the deductor and deductee.
2. Revised Reporting Format:
   • GSTN has introduced a dedicated field in GSTR-7 for reporting TDS deductions specific to scrap transactions.
   • Dealers must cross-verify the details of deductions with the supplier’s GSTIN to avoid mismatches.
3. Timely Updates in GSTR-7:
   • The TDS amount must be deposited and reported within the prescribed due date in GSTR-7 to avoid penalties.
4. Penalty for Non-Compliance:
   • Late filing or incorrect reporting can attract interest and penalties under Section 50 of the GST Act.
5. Automation Features for Ease of Compliance:
   • GSTN’s system now automatically identifies mismatches in reported TDS between scrap dealers and suppliers.

Actionable Steps for Scrap Dealers

1. Maintain Accurate Records:
   • Keep detailed invoices for all transactions subject to TDS.
2. Verify GSTIN Details:
   • Ensure supplier GSTINs are accurate before filing GSTR-7.
3. Use GSTN’s Tools:
   • Leverage automated checks in the GST portal to identify mismatches early.
4. Adhere to Deadlines:
   • File GSTR-7 within the due date to avoid interest or penalties.
5. Seek Professional Advice:
   • Consult a tax expert if you face complexities in TDS calculations or reporting.

Why This Advisory Matters

The GSTN’s latest advisory represents a critical step in ensuring transparency and compliance in the scrap trading sector. Accurate reporting of TDS deductions protects businesses from penalties and fosters trust within the GST system.

Conclusion

For scrap dealers, the GSTN advisory on TDS reporting serves as a reminder to streamline their processes and adopt best practices for compliance. By following the outlined steps, businesses can stay aligned with GST requirements, avoid penalties, and focus on growth.