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CMA Final · Indirect Tax Laws and Practice · TDS and TCS under GST

A Central Government department awards Rohan Engineering Works, a registered supplier, one contract for supply and installation with total value of Rs 3,00,000 excluding GST. Rohan raises three separate invoices of Rs 1,00,000 each (excluding GST), each charged with 18% GST, and the department pays them in sequence. Assuming the supply is intra-state, how much total TDS under GST is deductible on the three payments together?

Total TDS is Rs 6,000. The Rs 2,50,000 threshold applies to the value of the whole contract, not to each invoice. Since the contract is Rs 3,00,000, TDS at 2% applies on each payment's value excluding GST, giving 2% of Rs 3,00,000, which is Rs 6,000.

  1. ANil, because each invoice is below Rs 2,50,000
  2. BRs 4,000, only on the second and third invoices
  3. CRs 6,000Correct
  4. DRs 7,080

Explanation

The Rs 2,50,000 threshold is tested on the total value of the contract and not on individual invoices or payments. The contract value of Rs 3,00,000 exceeds it, so TDS at 2% applies to each payment, on the value excluding GST. 3 x (1,00,000 x 2%) = Rs 6,000. Nil ignores the contract-level test. Rs 7,080 is wrong because it takes 2% of the GST-inclusive value (3,54,000).

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