If component of VAT, Sales Tax, Excise Duty, CST, GST indicated separately in Invoice then Section 194Q TDS to be deducted without including Indirect Taxes, clarifies CBDT

TDS - CBDT - VAT - sales tax - CST - GST - Taxscan

The Central Board of Direct Taxes (CBDT) has clarified that if components of VAT, sales tax, excise duty, CST, GST are indicated separately in the invoice then section 194Q TDS is to be deducted without including Indirect Taxes.

It has been represented that in case of goods that are not within the purview of GST, such as petroleum products, various levies like VAT, Excise duty, sales tax, etc. are charged. While the treatment of the GST component has been clarified in circular no. 13 of 2021, the same is silent on other non-GST levies which have otherwise been subsumed and replaced by GST.

The Board has clarified that in case of purchase of goods which are not covered within the purview of GST when tax is deducted at the time of credit of amount in the account of the seller and in terms of the agreement or contract between the buyer and the seller, the component of VAT/Sales tax/Excise duty/CST, as the case may be, has been indicated separately in the invoice, then the tax is to be deducted under section 194Q of the Act on the amount credited without including such VAT/Excise duty/Sales tax/CST, as the case may be. 

However, if the tax is deducted on a payment basis, if it is earlier than the credit, the tax is to be deducted on the whole amount as it will not be possible to identify the payment with V A T/Excise duty/Sales tax/CST component to be invoiced in the future. Furthermore, in case of purchase returns, the clarification as provided in Para 4.3.3 of circular no. 13 of 2021 shall also apply to purchase returns relating to non-GST products liable to VAT/excise duty/sales tax CST, etc.

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