The taxable value of the assets is ₹10,00,000, with GST amounting to ₹1,80,000, making the total invoice value raised by the supplier ₹11,80,000.
During payment processing, it has been observed that the department has proposed to deduct Liquidated Damages (LD) of ₹50,000 on account of delay in the supply and installation of the assets.
As per my understanding, TDS under the Income Tax Act @ 2% and TDS on GST @ 2% should be deducted on the original taxable value of ₹10,00,000.
However, my reporting officer is of the view that TDS and TDS on GST should be deducted on the taxable value after adjusting the LD amount, i.e., ₹9,50,000.
In my opinion, Liquidated Damages are in the nature of compensation for delay and should not result in a reduction of the taxable value of the asset for the purpose of TDS deduction. Kindly help for correct calculation.
CAclubindia
