The Goods and Services Tax (GST) introduced Tax Deducted at Source (TDS) as a mechanism to ensure better compliance. Many businesses ask: On which goods or services is TDS in GST applicable? To answer this, let’s explore the complete list of goods and services applicable for TDS in GST with examples, rates, and compliance rules.
Understanding TDS in GST
Before going into the list, it is important to understand what TDS in GST means. TDS under GST requires certain notified entities (like government departments, local authorities, and PSUs) to deduct 2% tax when they make payments to suppliers.
This applies only if:
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The supply value under a single contract exceeds ₹2.5 lakh (excluding GST).
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The supply is taxable under GST (not exempted).
Thus, only specific goods and services are covered.
List of Goods and Services Where TDS in GST Applies
Unlike Income Tax TDS, in GST there is no separate notified list of goods and services. Instead, the rule applies to all taxable supplies of goods and services, except those specifically exempted under GST law.
Here’s how it works:
| Category | Applicability of TDS | Example |
|---|---|---|
| Taxable Goods | Yes, if supplied under contract > ₹2.5 lakh | Supply of furniture, machinery, raw material |
| Taxable Services | Yes, if supplied under contract > ₹2.5 lakh | IT services, consultancy, repair & maintenance |
| Exempt Goods/Services | No TDS applicable | Fresh fruits & vegetables, healthcare, education services |
| Imports | No TDS on imports | Goods imported from outside India |
So, the list is essentially all taxable goods and services under GST, subject to contract value threshold.
Exceptions: When TDS is Not Deducted
Even if the supply is taxable, there are situations where TDS does not apply:
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When the contract value is below ₹2.5 lakh.
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If the supply is made by an unregistered dealer.
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When the location of supplier and place of supply are in different states, but the recipient is registered in another state (to avoid mismatches).
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On exempted goods/services notified under GST.
Example of TDS Deduction on Goods and Services
Let’s take a practical case:
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A government department purchases IT services worth ₹5 lakh from a registered supplier.
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TDS = 2% of ₹5,00,000 = ₹10,000 (1% CGST + 1% SGST).
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The supplier receives ₹4,90,000, and ₹10,000 is deposited with the government.
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Similarly, if a PSU buys office furniture worth ₹3 lakh, TDS is deducted at 2% on the contract value.
Key Takeaways
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TDS under GST applies to all taxable goods and services if the contract value exceeds ₹2.5 lakh.
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There is no specific item-wise list, unlike Income Tax TDS.
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Exempt supplies, imports, and small-value contracts do not attract TDS.
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Deductors must deposit the deducted tax and file GSTR-7.
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Suppliers can claim the deducted amount in their electronic cash ledger.
Conclusion
The list of goods and services applicable for TDS in GST essentially covers all taxable supplies, provided the contract value crosses ₹2.5 lakh. Businesses working with government agencies, PSUs, or notified bodies should carefully check contract values and ensure compliance with TDS rules.
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