What is the Thresh hold for Deduction

1) Tax to deducted only if total value of supply under the contract exceeds Rs. 2,50,000/-

2) Example 1 –

a. ABC Contractors received the 4-purchase order from Bangalore Municipality.

  • i. Order 1 for Rs. 2 lakhs + GST 18% = 2,36,000/-
  • ii. Order 2 for Rs. 3 lakhs – Exempted Goods
  • iii. Order 3 for Rs. 2.4 lakhs + GST 5% = 2,52,000/-
  • iv. Order 4 for Rs. 2.5 lakhs + GST 12% = 2,80,000/-

b. Applicable

  • i. TDS is applicable only to order 4

c. Not applicable

  • i. Order 1 – Value less than 2.5 lacs
  • ii. Order 2 – Exempted Goods
  • iii. Order 3 – Taxable Value less than 2.5 lacs
  • iv. - no TDS will be deducted as the limit of Rs. 2.5 lakhs is not exceeded.

As per the explanation provided, the value of supply shall not include central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.

3) Example 2 –

a. ABC Contractors received the a Purchase order for 4.5 lacs; the break upof the supplies are as follows

  • i. 1.5 lacs are at 5%
  • ii. 1 lac is at 12%
  • iii. 25k is at 18%
  • iv. 2,25,000/- is of exempted supplies

TDS would not be applicable since taxable goods or services or both(2.25lacs), where the total value of such supply, under a contract(worth 4.5 lacs), does NOT exceeds two lakh and fifty thousand rupees