TDS provision - Labour Contractor

[Jatinder Kumar]

Dear Sir,

Please note, Office staff provided by labour contractor (Un-registered dealer) to our partnership firm (Registered under GST)

Payment around ₹ 50,000 per month paid to labour contractor.

Please guide me, TDS provisions under GST is applicable or not on such transactions.

Thanks & Regards,

Jatinder Kumar

[KASTURI SETHI]

TDS under GST is applicable on the transaction value (Excluding taxes) exceeding ₹ 2.50 lakhs. See Notification No.33/17 dated 15.9.17 effective from 18.9.17 CGST/SGST 1 % and if IGST 2%.

[Jatinder Kumar]

Thanks Sir

[Rajagopalan Ranganathan]

Sir,

According to Section 51 (1) of CGST Act, 2017 "Notwithstanding anything to the contrary contained in this Act, the Government may mandate,––

(a) a department or establishment of the Central Government or State Government; or

(b) local authority; or

(c) Governmental agencies; or

(d) such persons or category of persons as may be notified by the Government on the recommendations of the Council,

(hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one per cent. from the payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:

Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient."

Are you falling under any of categories enumerated at (a) (b) (c) and (d) above? Then only you have to deduct TDS from the amount payable to the service provider.

You say the service provider is unregistered. In that case you have to pay the tax under reverse charge mechanism under Section 9 (3) or 9(4) of CGST Act, 2017. This is my opinion.

[Jatinder Kumar]

Thank you very much sir,

Please provide GST Rate if tax paid under RCM

Regards,

Jatinder Kumar

[Rajagopalan Ranganathan]

Sir,

Service provided by labour contractor is classifiable under Service Accounting code 998311 vide Sl. No. 298 of Annexure to Notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 which states that "Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management."

The rate of CGST is 9% vide Sl. No. 21 (ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 which is also the rate for payment of tax under reverse charge mechanism.

[Jatinder Kumar]

Thank you very much all experts for your prompt replies.

Whether TDS provision under GST is applicable or not (Partnership firm fall under notified persons by the Government)

Please note,

Location of Labour Contractor (Un-registered) Delhi

Place of Supply Delhi

Service Receiver registered Delhi

Contract Value per month 50,000

If TDS provision applicable, registration required for Un-registered Dealer

Thanks & Regards,

Jatinder Kumar

AI Summary

TDS under GST applies where a notified deductor must deduct tax; otherwise reverse charge may apply to unregistered suppliers. TDS under GST applies only when the payer is a notified deductor under Section 51; private payers are not automatically liable. If the supplier is unregistered, the recipient may be liable to pay tax under the reverse charge mechanism under Section 9(3)/9(4). Applicable tax rates and registration obligations are set by the relevant GST rate and notification schedules and depend on service classification, location and notified status of the deductor.