TDS applicability

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This query is : Resolved

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This discussion clarifies the applicability of TDS and GST on payments made to the Police Department for personnel deployed on project sites. It confirms that GST is applicable under the Reverse Charge Mechanism (RCM) at 18%, and this liability should be booked when the expense is incurred, even if payment is delayed. TDS is generally not applicable on government payments, but GST under RCM must be paid separately as it cannot be deducted from the police department's bill.

A K SARMA

A K SARMA (Querist)

18 March 2020 We have engaged Police Department Services for deployment of Police personnel in connection with our ongoing Project work to protect our work from the local agitators. The police department provided round the clock police personnel services in connection with our Project work. Now they have raised a Demand Note for payment to the extent of their police personnel deployed at the work site. whether GST is applicable under RCM? and TDS also to be deducted on the sums payable? if applicable under which Section the TDS to be deducted? kindly advise

regards,
A K Sarma

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

18 March 2020 TDS not applicable on government payment.
18% GST payable under RCM.

A K SARMA

A K SARMA (Querist)

30 March 2020 Sir,
Thank you for clarifying the query. further, I request that kindly clarify whether, GST under RCM to be deducted while booking the liability as on 31.3.2020 as the payment shall be made in the month of May 2020 after receiving formal claim letter from the Police Department . Kindly advise.

regards,
A K Sarma

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 March 2020 Yes create liability in March for RCM.

Spurto Consultancy Services

Spurto Consultancy Services (Expert)

30 March 2020 RCM is applicable when the liability is booked or payment made which ever is earlier. RCM GST is to be paid from your pocket. You cannot deduct any amount from the bill.

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