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 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
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 4 with Tds
Pass Entry in Example 3 assuming TDS is applicable
Answer
Entry is different in both cases as shown below
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 6 With Tds
Entry is different in both cases as shown below
Answer
