APPLICABILITY OF GST WHEN TDS AND RETENSION MONEY IS DEDUCTED FROM ADVANCE

[Mehul Pandya]

DEAR EXPERTS,

ONE CONTRACTOR IS ENTERED INTO CONSTRUCTION AGREEMENT. AS PER AGREEMENT CUSTOMER WILL GIVE 10,00,000/- (TEN LAKHS) AS AN ADVANCE. BUT HE WILL DEDUCT FOLLOWING ITEMS AS PER AGREEMENT.

a. 3% - 30,000/- FOR SECURITY DEPOSIT

b.10% - 100,000/- AS A RETENSION MONEY

c. 2% - 20,000/- FOR TDS

AFTER ABOVE DEDUCTION CUSTOMER CREDITED 8,50,000/- IN CONTRACTORS BANK ACCOUNT.

MY QUERY IS WHICH AMOUNT WILL BE CONSIDERED FOR DISCHARGING GST LIABILITY ON ADVANCE RECEIPT ?

AI Summary

GST on advances requires taxability of TDS, retention and security deposits treated as advance when applied.
GST is chargeable on tax deducted at source; retention money and security deposits are treated as advances and taxable as advance receipts until the supplier applies such deposits or withheld amounts as consideration for the supply, in line with the proviso to the definition of advance under the CGST framework.