Conditions for deduction of TDS - GST Ready Reckoner - GST

Conditions for deduction of TDS Conditions for amount of deduction: Tax deduction is required if all the following conditions are satisfied Total value of taxable supply Rs.2.5 Lakh under a single contract. This value shall exclude taxes cess leviable under GST. If the contract is made for both taxable supply and exempted supply, deduction will be made if the total value of taxable supply in the contract Rs.2.5 Lakh. This value shall exclude taxes cess leviable under GST. Where the location of the supplier and the place of supply are in the same State/UT, it is an intra-State supply and TDS @ 1% each under CGST Act and SGST/UTGST Act is to be deducted if the deductor is registered in that State or Union territory without legislature. Where the location of the supplier is in State A and the place of supply is in State or Union territory without legislature - B, it is an inter-State supply and TDS @ 2% under IGST Act is to be deducted if the deductor is registered in State or Union territory without legislature - B. Where the location of the supplier is in State A and the place of supply is in State or Union territory without legislature B, it is an inter-State supply and TDS @ 2% under IGST Act is to be deducted if the deductor is registered in State A. When advance is paid to a supplier on or after 01.10.2018 to a supplier for supply of taxable goods or services or both. When tax deduction is not required to be made under GST: Tax deduction is not required in following situations: Total value of taxable supply Rs. 2.5 Lakh under a contract. Contract value Rs. 2.5 Lakh for both taxable supply and exempted supply, but the value of taxable supply under the said contract Rs. 2.5 Lakh. Receipt of services which are exempted. For example services exempted under notification No.12/2017 Central Tax (Rate) dated 28.06.2017 as amended from time to time. Receipt of goods which are exempted. For example goods exempted under notification No.2/2017 Central Tax (Rate) dated 28.06.2017 as amended from time to time. Goods on which GST is not leviable. For example petrol, diesel, petroleum crude, natural gas, aviation turbine fuel (ATF) and alcohol for human consumption. Where a supplier had issued an invoice for any sale of goods in respect of which tax was required to be deducted at source under the VAT Law before 01.07.2017, but where payment for such sale is made on or after 01.07.2017 [Section 142(13) of CGST Act] . Where the location of the supplier and place of supply is in a State(s)/UT(s) which is different from the State / UT where the deductor is registered. All activities or transactions specified in Schedule III of the CGST/SGST Acts 2017 , irrespective of the value. Where the payment relates to a tax invoice that has been issued before 01.10.2018. Where any amount was paid in advance prior to 01.10.2018 and the tax invoice has been issued on or after 01.10.18, to the extent of advance payment made before 01.10.2018. Where the tax is to be paid on reverse charge by the recipient i.e. the deductee. Where the payment is made to an unregistered supplier. Where the payment relates to Cess component. Case Law : IN RE: VINAYAK SINGH( 2021 (11) TMI 150 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL ) Issue : The applicant s supply to the Howrah Municipal Corporation for lifting and removing daily garbage etc. accumulated from the vats, dumping yards, containers, and other places on the roads, lanes, and bye-lanes of HMC area is exempt from payment of tax vide entry serial number 3 of the Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 (corresponding West Bengal State Notification No. 1136 FT dated 28/06/2017), as amended from time to time. Decision : As the applicant is making an exempt supply, the provisions of section 51 in respect of tax deduction at source do not apply in the instant case. Examples of various situations requiring deduction of tax Situation /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 25.01.2018 and 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 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 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 No