GST on TDS against import of service

[Kaustubh Karandikar]

In continuation of my earlier email on the same, XYZ (India) paying GST under reverse charge on import of service. XYZ also paying TDS under the Income Tax Act on the amount paid to the foreign service provider details of which are given herein below under two different situations:

Situation – 1 (As per the terms of the contract, the foreign supplier wanted full payment as per Invoice Value without any deduction)

Details	Amount (₹)
Invoice Value of the foreign Supplier	2452573.32
TDS Calculated on the Invoice Value i.e., on ₹ 2452573.32 and paid to the Govt.	613143.33
GST paid under reverse charge on the Invoice Value i.e., on ₹ 2452573.32	441463.20

Situation – 2 (There was no mention in the terms of the contract by the foreign supplier that he want full payment as per Invoice value without any deduction)

Details	Amount (₹)
Invoice Value of the foreign Supplier	613825.17
Actual amount paid to foreign supplier after deducting TDS paid to Indian Govt. of ₹ 61383	552442.17
TDS Calculated on the Invoice Value i.e., on ₹ 613825.17 and paid to the Govt.	61383.00
GST paid under reverse charge on the Invoice Value i.e., on ₹ 613825.17	110488.53

1. Under Situation -1, whether XYZ is required to pay GST under reverse charge on ₹. 2452573.32+ ₹ 613143.33 or on ₹. 2452573.32?
2. Whether the GST paid under reverse charge under Situation – 2 is correct?

What is he correct position of law under GST?

In my view, under Situation – 1, the GST is required to be paid on ₹. 2452573.32+ ₹ 613143.33. The GST paid under Situation – 2 is correct.

Views of the experts please.

AI Summary

Debate on GST and TDS for Indian Companies: Experts Advise Excluding TDS from GST Calculations Under Reverse Charge. A discussion forum addresses the issue of GST and TDS on the import of services by an Indian company, XYZ. Under two scenarios, XYZ pays GST under reverse charge and TDS on payments to a foreign service provider. In Situation 1, full payment is requested by the supplier, and opinions vary on whether GST should include TDS. Experts argue that GST should be based solely on the invoice value, excluding TDS, as TDS is not part of the service value. Situation 2, where TDS is deducted before payment, is deemed correct for GST calculation. Participants also discuss historical service tax practices and suggest amendments to agreements to align with GST regulations.