Taxation - Income TaxQuestion 5583 of 146
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13. Determine the Gross amount of TDS (Ignoring Break-up between CGST/SGST/IGST) which will be deducted by the recipients in respect of supplies made to various Govts.

Options

A` 6,000
B` 11,000
C` 12,250
D` 17,250
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Correct Answer

Option C` 12,250

All Options:

  • A` 6,000
  • B` 11,000
  • C` 12,250
  • D` 17,250

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Detailed Solution & Explanation

Under Section 51 of the CGST Act, 2017, TDS is required to be deducted at the rate of 2% (1% CGST + 1% SGST, or 2% IGST) from the payment made to the supplier of taxable goods or services, where the total value of such supply, under a contract, exceeds 2,50,000\displaystyle ₹2,50,000 (excluding taxes).
Let us analyze the three transactions:
1. Supply of sarees to Tamil Nadu Government: Agreed price = 2,80,000\displaystyle ₹2,80,000 including GST @ 12%. Value excluding tax = 2,80,0001.12=2,50,000\displaystyle \frac{₹2,80,000}{1.12} = ₹2,50,000. Since the value of supply does not exceed the threshold of 2,50,000\displaystyle ₹2,50,000, no TDS is applicable.
2. Supply of dhoties to Tamil Nadu Government: Value excluding tax = 3,00,000\displaystyle ₹3,00,000. Since the value exceeds 2,50,000\displaystyle ₹2,50,000, TDS is applicable.
TDS amount = 2%×3,00,000=6,000\displaystyle 2\% \times ₹3,00,000 = ₹6,000.
3. Supply of sarees and dhoties to Andhra Pradesh Government (Chennai undertaking): Value including tax = 3,50,000\displaystyle ₹3,50,000. Value excluding tax = 3,50,0001.12=3,12,500\displaystyle \frac{₹3,50,000}{1.12} = ₹3,12,500. This exceeds 2,50,000\displaystyle ₹2,50,000. Under Section 51, if the recipient has a TDS registration in Tamil Nadu, TDS is applicable on this supply.
TDS amount = 2%×3,12,500=6,250\displaystyle 2\% \times ₹3,12,500 = ₹6,250.
Total Gross TDS amount = 6,000+6,250=12,250\displaystyle ₹6,000 + ₹6,250 = ₹12,250.
Note: Under Section 51, no TDS is deducted if the location of the supplier and the place of supply are in a State different from the State of registration of the recipient. Here, the supplier is in TN and place of supply is TN, but the recipient is AP Govt. However, since the supply is to its Chennai undertaking (registered in TN), the registration of the recipient for this purpose is in TN, so TDS is deducted.

Hence, **Option C** is the correct answer.

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