21 November 2020
LEGAL BACKGROUND :
TDS U/s 194C of the Income Tax Act 1961 @ 1% (incase payment is made to Individual / HUF) or 2% (incase of any other entity) will be required to be deducted if the payment to Contractor is Rs. 30,000 or more in a Single Contract or Rs. 1,00,000 p.a.
As per CBDT Circular, No TDS shall be deducted on the GST amount if the GST portion is separately disclosed in the Tax Invoice.
The Advertisement Expenses incurred is Rs. 76,000, which includes GST @ 18% of Rs. 11,594/- Since the amount exceeds Rs. 30,000 in a single contract, you are liable to deduct TDS U/s 194C of the IT Act 1961. Now the question arises on what amount TDS shall be deducted ? TDS @ 1% / 2%, as the case may be, shall be deducted only on the Taxable Value of Rs. 64,406/-
Therefore TDS shall be deducted only on the Taxable Value of Rs. 64,406 and not on the GST portion of Rs. 11,594 ( provided it is separately disclosed in the Tax Invoice ).