Service Supplier provided foreign tour but deducted TDS is liable to pay GST ?
This query is : Resolved
28 June 2024
Service Supplier provided foreign tour but deducted TDS is liable to pay GST ?
11 July 2024
Yes, a service provider who deducts TDS (Tax Deducted at Source) on payments made for foreign tours is still liable to pay GST (Goods and Services Tax) on the services provided. Here’s a detailed explanation:
### Tax Deducted at Source (TDS):
- **Purpose**: TDS is deducted by the service recipient (payer) at the time of making certain payments to the service provider. It is a mechanism to collect tax at the source itself.
- **Applicability**: TDS is applicable under the Income Tax Act, 1961, and rates for TDS vary depending on the nature of the payment and residency status of the recipient.
### Goods and Services Tax (GST):
- **Applicability**: GST is applicable on the supply of goods or services in India. Even if TDS is deducted on a payment, it does not absolve the service provider from their GST liability.
- **Taxable Supply**: The service of providing foreign tours is considered a taxable supply under GST if it satisfies the criteria of being a service provided for a consideration in the course or furtherance of business.
### Treatment of TDS and GST:
1. **TDS Impact**: When TDS is deducted by the service recipient, it reduces the amount payable to the service provider, but it does not affect the service tax liability of the service provider.
2. **GST Liability**: The service provider must charge GST on the gross value of services provided (i.e., the total consideration before deducting TDS). The amount of TDS deducted by the recipient is not considered as part of the taxable value for GST purposes.
3. **GST Payment**: The service provider is required to collect GST from the service recipient and remit it to the government within the prescribed timelines. This is independent of any TDS deducted by the recipient.
### Conclusion:
In summary, while TDS is deducted on payments made for foreign tours under income tax provisions, the service provider is still liable to charge and collect GST on the full consideration received for the services provided. The TDS amount does not offset the GST liability of the service provider, as GST is calculated on the gross value of the services provided. Therefore, the service provider must ensure compliance with both TDS and GST requirements as per the respective laws.
### Tax Deducted at Source (TDS):
- **Purpose**: TDS is deducted by the service recipient (payer) at the time of making certain payments to the service provider. It is a mechanism to collect tax at the source itself.
- **Applicability**: TDS is applicable under the Income Tax Act, 1961, and rates for TDS vary depending on the nature of the payment and residency status of the recipient.
### Goods and Services Tax (GST):
- **Applicability**: GST is applicable on the supply of goods or services in India. Even if TDS is deducted on a payment, it does not absolve the service provider from their GST liability.
- **Taxable Supply**: The service of providing foreign tours is considered a taxable supply under GST if it satisfies the criteria of being a service provided for a consideration in the course or furtherance of business.
### Treatment of TDS and GST:
1. **TDS Impact**: When TDS is deducted by the service recipient, it reduces the amount payable to the service provider, but it does not affect the service tax liability of the service provider.
2. **GST Liability**: The service provider must charge GST on the gross value of services provided (i.e., the total consideration before deducting TDS). The amount of TDS deducted by the recipient is not considered as part of the taxable value for GST purposes.
3. **GST Payment**: The service provider is required to collect GST from the service recipient and remit it to the government within the prescribed timelines. This is independent of any TDS deducted by the recipient.
### Conclusion:
In summary, while TDS is deducted on payments made for foreign tours under income tax provisions, the service provider is still liable to charge and collect GST on the full consideration received for the services provided. The TDS amount does not offset the GST liability of the service provider, as GST is calculated on the gross value of the services provided. Therefore, the service provider must ensure compliance with both TDS and GST requirements as per the respective laws.
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