The Goods and Services Tax Network (GSTN) has issued an advisory addressing the concerns of scrap dealers and other taxpayers facing difficulties in reporting Tax Deducted at Source (TDS) for October 2024.
According to the notification, any registered person receiving supplies of metal scrap classified under Chapters 72 to 81 of the First Schedule to the Customs Tariff Act, 1975, from another registered person, is required to deduct TDS under Section 51 of the Central Goods and Services Tax (CGST) Act, 2017. This move aims to enhance tax compliance and curb evasion in the scrap metal industry.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
However, numerous taxpayers have reported difficulties in filing their TDS returns for October 2024. The crux of the problem lies in the GSTN system design, which does not permit filing returns for periods preceding the month of registration approval. Many taxpayers applied for GST registration in October 2024 following the new notification but received approval only in November 2024. As a result, the option to file returns for October 2024 is not visible in their GST portal dropdown menus.
To address this issue, the GSTN has advised affected taxpayers to consolidate the TDS amounts deducted between October 10 and November 30, 2024, and report them in the GSTR-7 return for November 2024. The GSTR-7 is designated for persons required to deduct TDS under GST regulations, metal scrap dealers.
The advisory stated as follows: –
“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 the month October 2024 as they are not able to file return for the month of 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 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.”
The scrap industry, often characterized by informal dealings, is now under greater scrutiny to ensure compliance, transparency and proper tax remittance. Failure to deduct and report TDS as mandated can result in penalties and interest charges under the CGST Act.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
The GSTN has reiterated its commitment to supporting taxpayers through this transition. Businesses experiencing difficulties are encouraged to contact the GSTN helpdesk at 1800-103-4786 or utilize the Grievance Redressal Portal for GST for further assistance.
In the interim, the GSTN advisory serves as a crucial stopgap, ensuring that taxpayers can fulfill their obligations without undue hardship. Businesses are advised to closely monitor official communications from the GSTN and the GST Council to stay informed about any further developments.
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