Calculation of Income Tax TDS and GST on Purchase Transactions

There are certain services on which GST applies along with the provisions of TDS under income tax. TDS should not be calculated on GST amount, in some cases where payment terms is set as 100% advance, full order value has to be paid as advance payment. In such cases, amount paid to vendor will be inclusive of GST and if TDS has to deducted while paying amount to vendor, then TDS is deducted only on the base amount and not on GST amount.

Create a purchase invoice

1. Choose the icon, enter Purchase Invoice, and then choose the related link.
2. Select Vendor on Invoice Header.
3. Select G/L Account for Service purchase on Purchase Invoice line. GST Group Code, HSN/SAC Code should not be blank and GST Credit value should be selected as Availment if the tax input credit is available or else Non-Availment on the Item or G/L Account.

For example, there is a purchase invoice for INR 10,000 and 18% GST (i.e. 9% CGST and 9% SGST/UTGST in case of Intra-State or Intra-Union Territory transaction or 18% IGST in case of Inter-State transaction) has to be charged and Income Tax TDS @10% also to be charged.

• GST calculation will appear in the Fact Box, as following :

  Component	Amount
  Transaction Value	10000
  GST Base Amount	10,000
  CGST	900
  SGST	900
  IGST	1800
  TDS	1000

• GL Entries for Income Tax TDS and GST in Intra-State purchase transactions, will be as following:

  Particular	Amount
  Service Account	10000
  SGST/UTGST Receivable Account	900
  CGST Receivable Account	900
  TDS Payable Account	-1000
  Vendor Account	-10800

• GL Entries for Income Tax TDS and GST in Intra-State or Intra-Union Territory purchase transactions (reverse charge) will be as following:

  Particular	Amount
  Service Account	10000
  SGST/UTGST Receivable Account (Interim)	900
  CGST Receivable Account (Interim)	900
  TDS Payable Account	-1000
  Vendor Account	-9000
  SGST/UTGST Payable (Interim) Account	-900
  CGST Payable (Interim) Account	-900

• GL Entries for Income Tax TDS and GST in Inter-State purchase transactions, will be as following:

  Particulars	Amount
  Service Account	10000
  IGST Receivable Account	1800
  TDS Payable Account	-1000
  Vendor Account	-10800

• GL Entries for Income Tax TDS and GST in Inter-State purchase transactions (reverse charge), will be as following:

  Particular	Amount
  Service Account	10000
  IGST Receivable Account (Interim)	1800
  TDS Payable Account	-1000
  Vendor Account	-9000
  IGST Payable (Interim) Account	-1800

See Also

Purchase Return to Composite Vendor

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