Situations When TDS is to be deducted Under GST
TDS provisions under GST are made effective from 1st October 2018, in following 2 cases TDS is applicable on the supply of goods or services or both:
- Tax is required to be deducted from the payment made/ credited to a supplier, if the total value of supply under a contract in respect of supply of taxable of goods or services or both, exceeds Rs. 2,50,000/- (Rupees two lakh and fifty thousand)
- TDS is applicable on all transaction except where location of supplier and place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.
Illustrations of various situations requiring deduction of tax:
| Situations / Contracts | Deduction required YES / NO | Remarks |
| Finance Department is making a payment of Rs.3 Lakh to a supplier of ‘printing & stationery’. | Yes | Where the total contract value of taxable supply is more than Rs.2.5 Lakh deduction is mandatory. |
| Education Department is making payment of Rs.5 Lakh to a supplier of ‘printed books and printed or illustrated post cards’ where payment for books is Rs.2 Lakh and Rs.3 Lakh is for other printed or illustrated post cards. | Yes, deduction is required in respect of payment of Rs. 3 Lakh only i.e. for payment in respect of taxable supply. | Books are exempted goods; no deduction is required in respect of supply of books. However, payment involving ‘printed or illustrated post cards’ is for supply of taxable goods and value of such supply is > Rs.2.5 Lakh; so deduction is required. |
| Finance Department, is making payment of Rs.1.5 Lakh to a supplier of ‘car rental service’. | See Remarks | Deduction is mandatory in case the total value of taxable supply under the contract > Rs.2.5 Lakh irrespective of the amount paid. However, if the total value of supply under a contract is < Rs.2.5 Lakh, deduction is not required. |
| Health Department executed a contract with a local supplier to supply “medical grade oxygen” of Rs.2.6 Lakh (including GST) and is making full payment. | No | Total value of supply as per the contract is Rs.2.6 Lakh (including GST). Tax rate is 12%. So, taxable value of supply (excluding GST) stands at Rs.2.6L x 100/112 = Rs.2.32 L < Rs.2.5 Lakh Hence, deduction is not required. |
| Municipal Corporation of Kolkata purchases a heavy generator from a supplier in Delhi. Now, it is making payment of Rs.5 Lakh and IGST @18% on Rs.5 Lakh for such purchase. | Yes, deduction is required @2% | Deduction is required in case of inter-State supply and if the value of taxable supply under a contract exceeds Rs.2.5 Lakh. |
| Fisheries Department is making a payment of Rs.10 Lakh to a contractor for supplying labour for digging a pond for the purpose of Fisheries. | No | This supply of service is exempt in terms of Sl. No. 3 of notification No.12/2017 – Central Tax (Rate) dated 28.06.2017 and hence deduction is not required. |
| Municipality is making payment of Rs.5 Lakh to a supplier in respect of cleaning of drains where the value of supply of goods is not more than 25% of the value of composite supply. | No | This supply of service is exempt in terms of Sl. No. 3A of notification No.12/2017 – Central Tax (Rate) dated 28.06.2017 as amended by notification no. 2/2018- Central Tax (Rate) dated 25.01.2018and hence deduction is not required. |
| Government school is making a payment of Rs.3 Lakh to a supplier for supply of cooked food as mid-day meal under a scheme sponsored by Central/State Government. | No | This supply of service is exempt in terms of Sl. No. 66 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 as amended and hence deduction is not required. |
| Health Department is making payment of Rs.10 Lakh to a supplier for supply of Hearing Aids. | No | This supply of goods is exempt in terms of Sl. No.142 of notification No. 2/2017 – Central Tax (Rate) dated 28.06.2017 as amended and hence deduction is not required. |
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| Situation (in all cases taxable contract value is over Rs.2.5 Lakh) | Location of Supplier | Place of Supply | State of registration of recipient | Type of Supply | Tax | TDS deduction |
| Govt. of WB purchases taxable goods from a local supplier | Kolkata | Kolkata | West Bengal | Intra State | CGST+ SGST | Yes |
| Govt. of Punjab purchases taxable goods from a supplier in Delhi | Delhi | Punjab | Punjab | Inter State | IGST | Yes |
| Govt. of WB engages a contractor of Delhi for renovation of Bangla Bhawan in Delhi | Delhi | Delhi | West Bengal | Intra State in the State of Delhi | CGST+ SGST | N |
GST TDS Provisions
GST TDS Accounting Entries in Supplier Books
when GST TDS will not be deducted : List of situations
GST TDS SOP released by CBIC : Download
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CBEC Circular No 65/39/2018-DOR : Guidelines for TDS by DDO under GST
Attention all DDO’S : TDS under GST w.e.f 01.10.2018 : Circular
Applicability of GST TDS on Inter State Supply ?