09 July 2024
In the scenario where a retailer/shopkeeper generates a bill as Capex Reimbursement to the shopping mall, let's address the implications regarding TDS (Tax Deducted at Source) and GST Input Tax Credit (ITC):
### TDS Applicability:
1. **TDS Applicability under Income Tax Act:** - TDS is applicable when a payment is made for professional or technical services. SAC code 995419 typically pertains to other business support services not elsewhere classified, which may or may not fall under the purview of professional or technical services. - If the payment qualifies as a professional or technical service, TDS may be applicable under Section 194J of the Income Tax Act. This section mandates TDS at the rate of 10% (or 2% in case of payment to a resident for fees for professional services or technical services) if the payment exceeds specified thresholds.
2. **TDS Deduction:** - If the Capex Reimbursement is considered a payment for professional or technical services and exceeds the threshold limits, the shopping mall (as the payer) would be required to deduct TDS before making the payment to the retailer/shopkeeper.
### GST Input Tax Credit (ITC):
1. **GST Input Tax Credit for the Shopping Mall:** - The shopping mall can claim Input Tax Credit (ITC) for the GST paid on the Capex Reimbursement invoice if it is registered under GST and the expenditure is incurred for business purposes. - The ITC can be claimed on the GST amount charged on the invoice, which in this case is 18%.
### Summary:
- **TDS Applicability:** TDS may be applicable under Section 194J of the Income Tax Act if the Capex Reimbursement is considered a payment for professional or technical services. - **GST Input Tax Credit (ITC):** The shopping mall can claim ITC on the GST charged on the invoice for Capex Reimbursement, provided it is registered under GST and the expense is for business purposes.
**Recommendation:** It's advisable for the shopping mall to consult with a tax advisor or CA to determine the exact applicability of TDS under Section 194J based on the nature of the payment. Additionally, ensure that GST compliance is followed correctly to claim eligible Input Tax Credit.
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