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

A State Government department, notified as a TDS deductor under GST, pays Kaveri Infra Pvt Ltd, a registered supplier, under a single works contract of Rs 8,00,000 (excluding GST). The invoice shows GST at 18% separately, and the supply is intra-state. What total TDS under GST must the department deduct, taking CGST and SGST together?

The department deducts Rs 16,000. TDS under GST is 2% in total, split 1% CGST and 1% SGST for an intra-state supply, charged on the contract value excluding GST. Since Rs 8,00,000 exceeds the Rs 2,50,000 threshold, 2% of Rs 8,00,000 gives Rs 16,000.

  1. ARs 8,000
  2. BRs 16,000Correct
  3. CRs 17,280
  4. DRs 28,800

Explanation

The contract value of Rs 8,00,000 exceeds Rs 2,50,000, so TDS applies. It is computed on the value excluding GST at a total of 2% (1% CGST + 1% SGST): 8,00,000 x 2% = Rs 16,000. Rs 17,280 wrongly includes the GST in the base (9,44,000 x 2% would be 18,880, and 8,64,000 x 2% is 17,280, which is not the invoice value either). Rs 28,800 applies the 18% GST rate on a wrong base.

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