Calculating and Deducting TDS on a GST Bill
Let’s suppose a government department contracts a supplier for services worth Rs. 5,00,000. The applicable GST rate is 18%. Here’s how TDS is calculated:
- Base Value: Rs. 5,00,000
- GST (18%): Rs. 90,000
- Total Invoice Amount: Rs. 5,90,000
- TDS Rate (2%): 1% CGST + 1% SGST
- TDS Amount: Rs. 10,000 (2% of Rs. 5,00,000)
- Net Payment to Supplier: Rs. 5,80,000 (Rs. 5,90,000 – Rs. 10,000)
Understanding the TDS provisions under GST is essential for government entities and eligible organizations. By following these guidelines and the provided example, you can ensure proper TDS deductions and maintain compliance with GST regulations.
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How to Deduct TDS on GST Bill? (with example)
TDS, or Tax Deducted at Source, is a mechanism in the Indian tax system designed to collect taxes at the time of payment. Under the GST regime, certain entities must deduct TDS when making payments for specific goods or services. In this article, we’ll explain how to deduct TDS on a GST bill and provide a clear, illustrative example.