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CA Intermediate · Taxation · Tax Deduction at Source and Collection of Tax at Source

A State Government department in Pune, a notified person liable to deduct tax at source under GST, receives taxable goods and services from Sahyadri Traders (a registered supplier) under one contract. The contract value, excluding GST, is Rs 2,50,000. Which statement correctly describes the TDS position under section 51 of the CGST Act?

No TDS applies. GST TDS under section 51 is required only where the contract value of taxable supply, excluding GST, exceeds Rs 2,50,000. A value of exactly Rs 2,50,000 does not exceed the limit, so the department need not deduct tax.

  1. ANo TDS applies because the contract value does not exceed Rs 2,50,000Correct
  2. BTDS at 2% of Rs 2,50,000 applies because the value is not below the threshold
  3. CTDS applies at 1% under CGST and 1% under SGST on the full invoice value including GST
  4. DTDS applies only if the supplier has opted for the composition scheme

Explanation

TDS under GST applies only when the total value of taxable supply under a contract exceeds Rs 2,50,000 (excluding GST). Here the value equals Rs 2,50,000, so it does not exceed the limit and no deduction is required. The option applying 2% wrongly treats the threshold as 'not less than' instead of 'exceeding'.

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