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Tds - Section 51

P MURUGAN (ACCOUNTANT) (186 Points)

08 November 2024

Food corporation of india who purchased non taxable goods or and non taxable services for which payment was given to registered tax payer.For this transaction, TDS IS applicable or not? please give reply.

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2 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5128 Points)
Replied 08 November 2024

TDS (Tax Deducted at Source) is not applicable on payment made for non-taxable goods or services, even if the payment is made to a registered taxpayer.

According to the Income Tax Act, TDS is applicable only on specific payments like salaries, interest, dividends, commissions, etc. listed under sections 192 to 196.

Since the goods or services purchased by Food Corporation of India are non-taxable, no TDS is required to be deducted on such payments.

However, it's important to note that: -

The payment should be for genuine business purposes. -

The payment should not be disguised as a way to avoid tax. -

The recipient should not be a non-resident (as TDS may apply in that case).

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Sahil Jaiswal (Article Assistant) (1072 Points)
Replied 12 November 2024

Hello,

For the Food Corporation of India (FCI) purchasing non-taxable goods or services from a registered taxpayer, GST TDS (Tax Deducted at Source) is not applicable. Here’s why:

GST TDS Applicability:

GST TDS Applicability: Under Section 51 of the CGST Act, TDS is applicable only on payments made for taxable goods or services, where GST is chargeable on the transaction.
Non-Taxable Goods/Services: Since the goods or services in this case are non-taxable (exempt or zero-rated), GST is not levied on the transaction. Therefore, GST TDS does not apply, as TDS can only be deducted on transactions that attract GST.
Nature of Supply: TDS under GST is applicable when a registered person (like FCI, being a government entity) procures taxable goods or services above the threshold limit from a registered supplier. For non-taxable supplies, there is no GST involved, so TDS does not apply.