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

Pioneer Infra Ltd, a government department contract awardee, receives payment from Delhi Jal Board (a notified deductee-authorised body). Consider the following: (i) a contract for supply of goods and services worth Rs 2,00,000 in total; (ii) a contract worth Rs 3,00,000 in total, where Rs 1,00,000 is the value of exempt supplies and Rs 2,00,000 is the taxable supply. Under GST TDS provisions, in which case(s) is the deductor required to deduct tax at source?

Neither contract attracts TDS. The threshold is a contract value above Rs 2,50,000 of taxable supply, excluding GST. Case (i) is Rs 2,00,000, and in case (ii) only Rs 2,00,000 is taxable because the exempt portion is excluded, so both fall below the limit.

  1. ANeither (i) nor (ii)Correct
  2. BOnly (i)
  3. COnly (ii)
  4. DBoth (i) and (ii)

Explanation

TDS applies only where the total value of supply under a contract, excluding GST, exceeds Rs 2,50,000, and the deduction is made on the taxable value. The test is on the contract's total value in the Act. In (i) value is Rs 2,00,000, below the threshold. In (ii) the contract value is Rs 3,00,000 but the threshold is tested on the value of supply under the contract; the taxable portion only is Rs 2,00,000 and exempt supplies are excluded, so no deduction arises. Hence neither requires TDS.

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