The GST Act of 2017 has indeed replaced the Service Tax which was previously mentioned in Circular No.1 of 2014. The change from Service Tax to GST has resulted in a significant impact on the computation of TDS (Tax Deducted at Source). Here's how you can manage this transition:
1. 🆚 Understand the New Tax Rate: The GST rates vary from 5% to 28%, depending on the type of service. You'll need to ascertain the applicable GST rate for your organization's services. To do so, refer to the GST rate schedule published by the Central Board of Excise and Customs.
2. 🆛 Update your Accounting Systems: Ensure that your accounting software or ERP system is updated to calculate GST instead of Service Tax. Your IT team should be able to assist with this.
3. 🆝 Modify Contracts: If your contracts have clauses related to Service Tax, they will need to be revised to replace references to Service Tax with GST. You may need legal assistance for this.
4. 👢 Alter Invoicing: All invoices must now reflect the GST amount. The GSTIN (GST Identification Number) of your company and the recipient (if registered under GST) must be mentioned in the invoice.
5. 🗶 Change in TDS Calculation: TDS should now be calculated on the amount paid/payable without including GST. According to section 51 of CGST Act, TDS is not to be deducted on the CGST, SGST, or IGST component of the invoice.
6. 🉤 Input Tax Credit: The GST paid on input services can be claimed as input tax credit, which was not the case with Service Tax. You will need to maintain proper documentation to claim this credit.
7. 🈦 Communicate with your Clients: It's essential to communicate these changes to your clients to ensure they are aware of the changes in the tax computation and invoicing process.
Remember, non-compliance with GST rules can lead to penalties. Hence, ensure that you are fully aware of the GST Act and rules (as applicable in Delhi, India) and comply with them. You can visit the official GST portal of the Government of India for more detailed information and updates.