Central Board of Direct Taxes vide notification no. F.No. 275/59/2012-IT (B) dated 19th July 2017 hereby clarify that TDS is not required to be deducted on the GST portion.
A common query regarding the deduction of TDS that we get is whether TDS is to be deducted on goods and service tax or not at the time of making a payment. This is something that confuses a lot of people. The short answer to the question is–no, TDS does not apply to goods and service tax.
Let’s take a look at a little longer answer to understand how TDS is to be deducted on a bill when goods and service tax is to be paid. Let’s suppose you employed someone’s services and you have to make a payment of Rs 45,000 for the same. Since the payment is above the threshold limit of Rs 30,000 per bill, TDS needs to be deducted on it. But the service provider has charged 18% goods and service tax, so the billed amount has come to Rs 53,100.