GST Impact on TDS

  1. 1. Introduction to TDS in GST
  2. 2. When and who is liable to deduct TDS under GST
    1. a) When to deduct ?
    2. b) Who is liable to deduct TDS under GST
  3. 3. TDS rate in GST
  4. 4. TDS under GST with example
  5. 5. Recent GST notification on TDS

1. Introduction to TDS in GST

Tax deducted at source introduced in GST is a mechanism to track the transaction of supply of goods and/or services by making the recipient of such supply to deduct a small percentage of amount to be paid to the supplier of such goods and/or services and deposit the same with the government.

The supplier in such cases takes into account the amount so deducted and makes the balance payment of tax to the government.

2. When and Who is Liable to Deduct TDS Under GST

  • When to deduct ?
    • The base on which TDS is deductible is the aggregate value of contract
    • Exceeding a sum of Rs. 2.5 lacs
    • For the purpose of determining the value of Rs. 2.5 lacs, taxable value has to be taken.

    Note : Taxable value is the value prior to tax computation or the value on which tax is proposed to be calculated.

  • Who is liable to deduct TDS under GST ? The deductors of tax at source can be one or more of the following:
    • Department of Central or State Government.t
    • An establishment of the central or state Government.
    • Governmental agencies.
    • Local authority.
    • Such category of persons as may be notified by Central or State Governments on the recommendation of GST Council.

3. Why the Two Supplies are Considered Important in GST

GST council has defined specific rates for goods and services. Sometimes supply of a good and service may be connected or may be done together even though not connected.

Lets say an Air Conditioner unit supplied along with installation services are also supplied along with it. The GST Act defines how such supply must be rated. Thereby the concept of composite supply and mixed supply becomes important. It helps to determine the correct GST rate and provides uniform tax treatment under GST for such supplies.

3. TDS Rate in GST

The provisions laid in the act reads a rate of 1%, which would be required to be deducted and deposited from the payments made or credited to the supplier of taxable goods and services as may be notified by the Central or State Governments on the recommendation of GST Council.

4. TDS Under GST With Example

A better understanding of TDS provisions under GST could be claimed from the example given below :

Selling price of 10 Type writers @ Rs. 10,000/- per type writer (Taxable Value) Rs. 1,00,000
If the rate of tax (CGST) on Type writer is 28%
CGST @ 14% Rs. 14,000
SGST @ 14 % Rs. 14,000
Total Invoice Value Rs. 1,28,000
How to deduct TDS on GST bill given above ?
  • TDS to be calculated on the base (taxable value) = Rs. 1,00,000/-
  • TDS rate in GST = 1% (CGST) and 1% (SGST)
  • Calculation to be made excluding the tax amount (Rs. 1,28,000 (-) Rs. 28,000)
  • In the given example TDS calculation would work out to be

    Rs. 1,00,000 x 1 % = Rs. 1,000 (CGST)

    Rs. 1,00,000 x 1%. = Rs. 1,000 (SGST)

5. Recent GST Notification on TDS

The CBIC has recently issued a Press Release stating that implementation of provisions relating to TDS/ TCS under CGST Act, 2017 (i.e. deduction of tax at source and collection of tax at source), to be deferred/ suspended till 30 Sept. 2018


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