When TDS is to be deducted Under GST : Situations

By | October 3, 2018
(Last Updated On: October 3, 2018)

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:

  1. 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)
  1. 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 / ContractsDeduction required YES / NORemarks
Finance Department is making a payment of Rs.3 Lakh to a supplier of ‘printing & stationery’.YesWhere 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 RemarksDeduction 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.NoTotal 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.NoThis 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.NoThis 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.NoThis 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.NoThis 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.

Situation (in all cases taxable contract value is over Rs.2.5 Lakh)Location of SupplierPlace of SupplyState of registration of recipientType of SupplyTaxTDS deduction
Govt. of WB purchases taxable goods from a local supplierKolkataKolkataWest BengalIntra StateCGST+ SGSTYes
Govt. of Punjab purchases taxable goods from a supplier in DelhiDelhiPunjabPunjabInter StateIGSTYes
Govt. of WB engages a contractor of Delhi for renovation of Bangla Bhawan in DelhiDelhiDelhiWest BengalIntra State in the State of DelhiCGST+ SGSTN

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