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

Raghav Infra Ltd, a registered person, is a notified TDS deductor under GST because it is a local authority. It awards a works contract to Shree Builders (registered in the same State) for a contract value of Rs 2,40,000 under a single contract, excluding GST. Both parties are in the same State. Which statement is correct?

No TDS is required. GST TDS under section 51 applies only when the contract value, excluding GST, exceeds Rs 2,50,000. Since the works contract is worth Rs 2,40,000, it falls below the threshold, so the local authority need not deduct tax.

  1. ATDS is not required as the contract value does not exceed Rs 2,50,000Correct
  2. BTDS at 2% of Rs 2,40,000, i.e. Rs 4,800, must be deducted
  3. CTDS at 1% each under CGST and SGST is required on Rs 2,40,000
  4. DTDS of 2% applies on the invoice value including GST

Explanation

GST TDS under section 51 applies only where the total value of supply under a contract exceeds Rs 2,50,000, excluding taxes. Here the value is Rs 2,40,000, which does not exceed the threshold, so no deduction is needed. Options B and C wrongly ignore the threshold, and D uses the wrong base since the value excludes GST.

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