GST Impact on TDS


Tally Solutions | Nov-25-2019

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.

When and Who is Liable to Deduct TDS Under GST

  • When to deduct?

    • The base on which TDS is deductible if the aggregate value of the contract exceeds 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.

    • 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.

TDS Rate in GST

The provisions laid in the act reads a rate of 2%, 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.

TDS Under GST With Example

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

The selling price of 10 Typewriters @ Rs. 10,000/- per typewriter (Taxable Value)

Rs. 1,00,000

If the rate of tax (CGST) on Typewriter 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)


Read More on GST

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