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CS Executive · Tax Laws and Practice · Basics of Goods and Services Tax

Under the IGST Act, 2017, where tax is deducted at source on a payment made to a supplier, the deductor deducts tax at what rate?

The deductor deducts tax at two per cent from the payment made or credited to the supplier under the IGST Act. The one per cent figure applies to each of CGST and SGST separately, not to the integrated tax rate stated in the provision.

  1. AOne per cent of the payment made or credited
  2. BTwo per cent of the payment made or creditedCorrect
  3. CFive per cent of the payment made or credited
  4. DTen per cent of the payment made or credited

Explanation

The first proviso to the IGST Act provision on application of CGST provisions states that the deductor shall deduct tax at the rate of two per cent from the payment made or credited to the supplier. One per cent is the rate for CGST or SGST each, which is why it tempts, but the IGST rate is two per cent.

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