GST Advisory on TDS Deducted by scrap Dealers in October 2024!

In October 2024, the Goods and Services Tax (GST) authorities issued a crucial advisory regarding the Registrations and Tax Deducted at Source (TDS) obligations for scrap dealers. This guidance aimed to clarify the requirement of GST Registration and TDS provisions under GST and their application to transactions involving the sale and purchase of scrap materials. With this update, scrap dealers are required to comply with registration and specific TDS deductions thereafter, ensuring proper tax collection and compliance within the sector. 

However, the taxpayers applied for GST registration in October 2024 pursuant to the above notification, their GST registrations were approved only in November 2024. Therefore, they are unable to report TDS deducted in the month of October 2024 as they are not able to file a return for the month of October 2024. 

The GSTN has issued an important advisory to provide clarity on the above specific issue on 26^th November 2024.

Let’s understand the changes!

Advisory dated 26th November 2024

Advisory for Reporting TDS Deducted by scrap Dealers in October 2024

Nov 26th, 2024

As per Notification No. 25/2024-Central Tax, effective from 10.10.2024, any registered person receiving supplies of metal scrap classified under Chapters 72 to 81 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), from another registered person, is required to deduct TDS under Section 51 of the CGST Act, 2017.

2. In this regard various tickets have been received on the issue that taxpayers are unable to report TDS deducted in October 2024 as they are not able to file returns for October 2024. This issue has occurred because while the taxpayers applied for GST registration in October 2024 pursuant to the above notification, their GST registrations were approved only in November 2024. Hence, in the return dropdown, the month of October 2024 is not visible to such taxpayers. This is as per the existing GSTN system design where returns for tax period prior to registration month is not enabled for taxpayers.

3. However, to resolve the issue, taxpayers who were granted registration in November 2024, but deducted TDS in October 2024, are hereby advised to report the consolidated amount of TDS deducted for the period from 10.10.2024 to 30.11.2024 in the GSTR-7 return to be filed for the month November 2024.

For any further assistance, taxpayers may contact the GSTN helpdesk.

ThankingYou,
Team GSTN

Key Highlights Advisory

1. Notification on TDS Deduction: As per Notification No. 25/2024-Central Tax (effective from 10th October 2024), scrap dealers receiving supplies of metal scrap (Chapters 72-81 of the Customs Tariff Act) must deduct TDS under Section 51 of the CGST Act, 2017.
2. Issue for October Reporting: Taxpayers who applied for registration in October 2024, but obtained the approval in November 2024 faced issues reporting TDS deducted in October 2024, as the return for October was not available in the GSTN system due to late registration approval.
3. Resolution: Taxpayers who registered in November 2024 but deducted TDS in October 2024 are advised to report the consolidated TDS amount for the period from 10th October to 30th November 2024 in the GSTR-7 return for November 2024.

Conclusion

The advisory provides a clear solution for scrap dealers who faced challenges reporting TDS deducted in October 2024 due to delayed GST registration. By consolidating the TDS amount for the period from October 10, 2024, to November 30, 2024, and reporting it in the GSTR-7 return for November 2024, taxpayers can ensure compliance with the newly implemented TDS provisions.

It is important for all affected taxpayers to follow the outlined process to avoid any discrepancies in their filings. For additional support, taxpayers are encouraged to reach out to the GSTN helpdesk. 

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