Comparative review
Provisions for deduction of tax at source exist in the VAT laws. There were no TDS provisions in central excise or service tax laws, though there was a concept of reverse charge. Under most State VAT laws, TDS provisions are applicable on payments made to works contractors. Some States had provisions for TDS on ‘transfer of right to use goods’ Comparative table between State VAT Law and CGST Act:
| S.No. | State VAT Law | CGST Act |
| 1 | Applicable only to works contractors. | Applicable to recipients notified by the Central Government on recommendations of GST council. |
| 2 | Two different standard rates | One standard rate viz. 1% |
| 3 | Deductor- every works contractee or awarder of contract | (a) A department or establishment of the Central or State Government, or (b) Local authority, or (c) Governmental agencies, or (d) Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council (Refer Notification 33/2017 – Central Tax and para 51.1) |
| 4 | Two certificates have to be furnished by the Deductor. 1. Certificate of deduction 2. Certificate of remittance. | One single certificate of deduction –cumremittance to be furnished by the Deductor within five days of remittance. |
| 5 | If certificate of deduction alone is furnished by the Deductor, burden on the works contractor to prove deduction of tax at source. | No such burden cast on the Deductee. More onus is on the Deductor. |
| 6 | Refund provisions and Credit provisions not clear. | Refund provisions clear. Credit can also be claimed from the amount reflected in the Electronic Cash Ledger |
| 7 | TDS would apply on payments towards transfer of property in goods in the State. Inter-state supplies are generally not subject to TDS. | TDS would apply on the payment made or credited to the supplier. No TDS on interstate supplies. |