Tds on petrol or diesel

TDS Applicability The applicability of Tax Deducted at Source (TDS) on purchases made by a government department depends on the nature of the transaction.

Here's a breakdown:

Purchases Subject to TDS - *Fuel for Government Vehicles*: TDS might be applicable if the purchase is from a dealer or supplier who is not exempt from TDS. -

*Fertilizers, Pesticides, and Seeds*: TDS might not be applicable if these purchases are from manufacturers or suppliers who are exempt from TDS under specific sections of the Income-tax Act, 1961.

Purchases Not Subject to TDS - *Fuel for Agriculture Use*: If the fuel is purchased for agricultural purposes, it might be exempt from TDS, depending on the supplier's status and the specific provisions of the Income-tax Act. -

 *LPG Gas Cylinders*: TDS might not be applicable if the purchase is from a public sector undertaking or a company exempt from TDS. Key

Considerations - *Section 194Q*: TDS is applicable on purchases of goods exceeding ₹50 lakh in a financial year from a resident seller. -

*Exemptions*: Certain government departments or purchases might be exempt from TDS under specific sections of the Income-tax Act. -

*PAN and Threshold*: TDS applicability also depends on the PAN of the supplier and the threshold limits specified in the Income-tax Act [1].

 Conclusion To determine the TDS applicability, consider the following: -

 *Nature of Purchase*: Identify the type of goods or services being purchased. -

*Supplier's Status*: Determine the supplier's status, including their PAN and exemption status. -

*Threshold Limits*: Verify the threshold limits for TDS applicability. 

Income-tax TDS: generally none on purchases of goods.

• Sec 194Q applies only where the buyer's turnover exceeds Rs 10 crore. A government department has no "turnover", so it does not apply.

• TCS under Sec 206C(1H) (on the seller) was omitted from 1 April 2025.

• Purchase of goods is not "work", so Sec 194C does not apply.

GST TDS is the provision that actually applies to government departments (Sec 51, Notf 50/2018-CT):

• Deduct 2% (1% CGST + 1% SGST, or 2% IGST) where the total value of the contract exceeds Rs 2.5 lakh, excluding GST.

• It applies only to taxable supplies:

– Petrol and diesel: not under GST, so no GST TDS.

– Seeds: exempt, so no GST TDS.

– Fertilisers, pesticides, LPG cylinders: taxable, so GST TDS applies if the contract exceeds Rs 2.5 lakh.

• Requirements: the department needs GST registration as a TDS deductor. File GSTR-7 by the 10th of the following month and issue the TDS certificate.