How to differentiate Input Tax Credit with TDS credit?
What is Input Tax Credit? How does TDS credit work under GST regime? What are the difference between Input Tax Credit and TDS credit?
Under GST system, the following information explains about Input Tax Credit and TDS credit.
ITC is a mechanism to ensure that the supplier needs to pay GST in cash only on the value addition. ITC mechanism thereby avoids cascading of taxes that is ‘tax on tax’. Under the previous system of indirect taxation, credit of taxes being levied by Central Government was not available as set-off for payment of taxes levied by State Governments, and vice versa.
Under TDS credit, the amounts deducted by the deductor get reflected in the GSTR-2 of the supplier (deductee). The supplier can take this amount as credit in his electronic cash register and use the same for payment of tax or any other liability. A TDS certificate is required to be issued by deductor (the person who is deducting tax) in Form GSTR-7A to the deductee (the supplier from whose payment TDS is deducted), within 5 days of crediting the amount to the Government, failing which the deductor would be liable to pay a late fee of Rs. 100/- per day from the expiry of the 5th day till the certificate is issued
The details about Input Tax Credit and TDS credit with simple language from GST terms have been mentioned in this web blog separately. We suggest you to read these articles on Input Tax Credit and TDS credit, so as to enable you to have a clear idea on these GST terms.
For your immediate reference, we give below web links on Input Tax Credit and TDS credit separately below. You may kindly read the below links to know more about TDS credit and Input Tax Credit.
Meaning of Input Tax Credit Mechanism in GST
Term TDS credit, TDS certificate under GST
The above information easily explains about TDS credit and Input Tax Credit.
We hope, you have satisfied with the difference between Input Tax Credit and TDS credit explained above. Do you have different thought on difference between TDS credit and Input Tax Credit?
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