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TDS ON ADVERTISEMENT

NOOHUNNAJEEULLA KHAN Harihar (79 Points)

21 November 2020

I have incurred advertismet expense for name board display to our dealers. Inv made by party of rs 76000/- in wich taxable amount 64406 + Gst 11594. now my query if i m not wrong then this will attract tds u/s 194c of it act, but i am confused on wich amount i have to deduct tds, on rs 64406/- or on total inv amount ie 76000/- because I have claimed the gst as input tax. and booked 64406/- as advertisment expenses. kindly guide me. Thanks in advance

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6 Replies

shyam lahoti (STUDENT) (30 Points)
Replied 21 November 2020

TDS should be deducted only on taxable value, not on GST components,.. so u should deduct tds on 64406 only

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JATINDER KUMAR (Accountant) (3662 Points)
Replied 21 November 2020

You need to deduct TDS on Rs. 64406 (Taxable Value)

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NOOHUNNAJEEULLA KHAN Harihar (79 Points)
Replied 21 November 2020

Thanks again sir

Shivam RC (Student) (23683 Points)
Replied 21 November 2020

LEGAL BACKGROUND :

TDS U/s 194C of the Income Tax Act 1961 @ 1% (incase payment is made to Individual / HUF) or 2% (incase of any other entity) will be required to be deducted if the payment to Contractor is Rs. 30,000 or more in a Single Contract or Rs. 1,00,000 p.a.

As per CBDT Circular, No TDS shall be deducted on the GST amount if the GST portion is separately disclosed in the Tax Invoice.

FACTS :

The Advertisement Expenses incurred is Rs. 76,000, which includes GST @ 18% of Rs. 11,594/- Since the amount exceeds Rs. 30,000 in a single contract, you are liable to deduct TDS U/s 194C of the IT Act 1961. Now the question arises on what amount TDS shall be deducted ? TDS @ 1% / 2%, as the case may be, shall be deducted only on the Taxable Value of Rs. 64,406/-

Conclusion :

Therefore TDS shall be deducted only on the Taxable Value of Rs. 64,406 and not on the GST portion of Rs. 11,594 ( provided it is separately disclosed in the Tax Invoice ).

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