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GST on Retainer ship contract employment

02 November 2021

Hi,

My ex-employer is offering m a job again as a consultant for 2 years on a retainer ship contract with fixed monthly remuneration and also a yearly variable component based on performance. Since I am 59 years old I am not being offered the job as regular employee as i have crossed the retirement age. My questions are :

1) What will be the tax charged to me by the company, will it be a TDS of 10% ?
2) Is GST applicable in this case, if yes who will pay the GST, my company or myself and what will be the % of GST if applicable?
3) Can I claim the TDS during my ITR process, and If I am eligible for filing retruns under Section 44ADA ?

Thanks and Regards
RSR

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7 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5150 Points)
Replied 02 November 2021

You can gothrough this article link.

https://www.caclubindia.com/articles/note-on-retainership-of-consultant-369.asp

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Rajendra Prasad (Employee Private) (1867 Points)
Replied 02 November 2021

1. Applicable TDS shall be 10% as per the section 194J.

2. As your are service provider, If you are in other than the state of special category as per GST Act and your aggregate turnover per annum exceeds Rs.20.00 Lacs, GST will be applicable @ 18% and you have to collect and has to pay to the Government and if your are in special category state limit of turnover per annum will be Rs10.00 Lacs.

3.You can claim your Income TDS during your ITR Process and yes, you are eligible for filing returns under Section 44ADA of Income Tax if your total gross receipts are with in the prescribed limit.

2 Like

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 02 November 2021

Agree with above comment

Ramachandran R S (CIO) (58 Points)
Replied 02 November 2021

Thank you for the prompt reply. Just one more query, when you say I have to collect the GST, from whom? Do you mean I have to deposit the GST of 18% from my net income after company deducts 18% TDS or the company will do the same based on RCM method? In either case am I eligible for input credit of GST?

Rajendra Prasad (Employee Private) (1867 Points)
Replied 02 November 2021

If your annual receipt exceeds Rs 20.00 Lac you have take registration in GST and has to submit Tax Invoice to the company monthly and has to collect 18% GST in additional to your remuneration and has to collect the amount from Company. What ever GST amount 18% collected has to pay to Government.
If your annual total receipt is less than Rs.20.00 Lacs no registration and liability of GST.
In company they follow their treatment.

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CA Aakarsh Jain (CA) (10431 Points)
Replied 03 November 2021

Agreed with above comment

Nareshnk (SEO - Executive) (32 Points)
Replied 01 July 2022

No, there will be no TDS on behalf of your employer. The basic reason for this is that there is no capital contribution made by your employer for you as an employee. Your employer can deduct TDS on behalf of his employees, including himself, if he is running a business which includes employing others. But in your case, there was no such contribution. The same TDS will not be applicable on your behalf since there is no capital contribution made by your employer.