Tds on GST value

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This discussion clarifies whether Tax Deducted at Source (TDS) under Section 194Q should be calculated on the basic value or the total value including GST. According to Circular No. 13/2021, if GST is shown separately on the invoice, TDS is deducted only on the basic value credited to the seller. However, if tax is deducted on payment and it precedes the credit, TDS is applied to the entire amount as the GST component cannot be isolated.

Aswathy Nair

Aswathy Nair (Querist)
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01 June 2022 Is tds u/s 194Q deducted on GST value or basic value?

Saurabh Anokhchand Jain

Saurabh Anokhchand Jain (Expert)
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01 June 2022 In Para 4.3.2 of circular no. 13 of 202 1 dated 30.06.202 1, it has been provided that in case the GST component has been indicated separately in the invoice and tax is deducted at the time of credit of the amount in the account of the seller, then the tax is to be deducted under section 194Q of the Act on the amount credited without including such GST.

It has been further provided that in case the tax is deducted on a payment basis as the payment is earlier than the credit, the tax is to be deducted on the whole amount as it is not possible to identify that payment with the GST component of the amount to be invoiced in future.

Hope this clarifies!