Here we will learn how to deduct TDS if we get a bill of a party(vendor) with GST and what will be the entries in this case

Sometimes we get a bill of Party with GST

We need to deduct TDS on this bill

Should we deduct TDS on Base Value (Amt before GST) or Total (Amt including GST)

As per CBDT Circular

We need to Deduct TDS on Base Value (Amt before GST) in this case

 

Explanation

As we know GST is Added in to the amount and TDS is deducted from Bill

So first we add GST in Amount to arrive at total amount

Then from this Total amount we deduct TDS to arrive at Net Amount

However TDS is deducted on Taxable Value (amount before GST) and Not Invoice Value (Amt Including GST)

Deducting TDS on Total amount would mean deducting Tax on Tax. hence it would lead to double taxation

 

Example

Supposed Bill of Advertising is of 100000=18% GST = 118000 Total

Here 100000 is Taxable Value and 118000 is Invoice Value

TDS Rate is 10%

Answer

We need to Deduct TDS on @10% of 100000 = 10000

We need to pay to the Party balance amount of 118000 - 10000 = 108000

This tax deduction is same in case we get Input Tax Credit of this GST or not


Bill Received First

Example 1, No TDS

Suppose Bill Received on 10 June From

Max Ltd

Particular Amount
Consultancy Charges 100000
Add  
Cgst 9% 9000
Sgst 9% 9000
Total 118000

 

Answer

example 1 ans.jpg

 

Example 2, GST with TDS

Suppose in Example 1, TDS @ 10% is also applicable under 194J

Pass entry

Answer

In both cases,TDS will be deducted @ 10% on 100000=10000

example 2 ans.jpg


Whole Payment in Advance

Example 3, No TDS

Payment Made in Advance

The Company entered into connect with Max Ltd on 25 April for 100,000+ GST 18%

Whole amount paid in advance on that date to Max Ltd

Bill Received on 10th June from Max for Consultancy Service

Pass Entries assuming no TDS

 

Answer

There can be 2 Cases

Our Company is taking Input of GST (We are Service Providers registered in GST)

Our Company is not taking Input of GST tax as we are not registered in GST

Entry is different in both cases as shown below

example 3 ans.jpg

 

Example 4 with Tds

Pass Entry in Example 3 assuming TDS is applicable

Answer

Entry is different in both cases as shown below

example 4 ans.jpg


Partial Payment in Advance

 

Example 5 No TDS

Payment Made in Advance

The Company entered into connect with Max Ltd on 25 April for 100,000+ GST 18%

20% paid in advance on that date to Max Ltd

Bill Received on 10th June from Max for Consultancy Service

Balance 80% Paid on 28 October

Answer

example 5 ans.jpg

 

Example 6 With Tds

Entry is different in both cases as shown below

Answer

example 6 ans.jpg

 

  1. Accounts and Finance
  2. Accounts with Taxes

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.