Notification No. 73/2018 – Central Tax Explained

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Notification No. 73/2018 – Central Tax: Seeks to exempt supplies made by Government Departments and PSUs to other Government Departments and vice-versa from TDS.

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i)]

G.S.R. (E).— In exercise of the powers conferred by sub-section (3) of section 1 read with section 51 of the Central Goods and Services Tax Act, 2017 (12 of 2017), hereafter in this notification referred to as the said Act, the Central Government, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 50/2018- Central Tax dated the 13^th September, 2018 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 868 (E) dated the 13^th September, 2018, namely:–

In the said notification, after the second proviso, the following proviso shall be inserted, namely:-

“Provided also that nothing in this notification shall apply to the supply of goods or services or both which takes place between one person to another person specified under clauses (a), (b), (c) and (d) of sub-section (1) of section 51 of the said Act.”.

(Dr. Sree Parvathy S. L.)
Under Secretary to the
Government of India

Note:- The principal notification No. 50/2018- Central Tax, dated the 13^th September, 2018 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 868 (E), dated the 13^th September, 2018 and last amended vide notification No. 61/2018-Central Tax, dated the 05^th November, 2018, published vide number G.S.R 1084(E), dated the 05^th November, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 73/2018 – Central Tax

Q1: What is Notification No. 73/2018 – Central Tax?

Answer:
It exempts GST TDS on supplies made between Government departments, local authorities, and PSUs under Section 51.

Q2: Which section governs GST TDS?

Answer:
GST TDS is governed by Section 51 of the CGST Act, 2017.

Q3: What change did Notification 73/2018 introduce?

Answer:
It exempted TDS on supplies between entities specified under Section 51(1)(a) to (d). 73

Q4: Does this apply to supplies between two PSUs?

Answer:
Yes, if both PSUs fall under Section 51(1).

Q5: Is TDS required when government purchases from private suppliers?

Answer:
Yes. TDS still applies in such cases.

Q6: Does this notification remove TDS completely?

Answer:
No. It removes TDS only for inter-government and PSU transactions.

Q7: From when is this notification effective?

Answer:
It became effective from 31 December 2018.

Q8: Which notification was amended?

Answer:
Notification No. 50/2018 – Central Tax was amended. 73

Q9: What is the TDS rate under GST?

Answer:
Generally:
1% CGST
1% SGST
(Total 2% for intra-state supplies)

Q10: Does this apply to contractors working for government?

Answer:
No. If a contractor supplies to the government, TDS still applies.

Q11: Do government entities still need GST registration?

Answer:
Yes, if they meet GST registration criteria.
👉 https://finodha.in/online-gst-registration/

Q12: What happens if TDS is wrongly deducted?

Answer:
It may lead to:
Refund claims
Accounting complications
Compliance issues

Q13: How can departments avoid TDS mistakes?

Answer:
Check counter-party status
Confirm if both fall under Section 51
Maintain proper documentation

Q14: Does this apply to local authorities like municipalities?

Answer:
Yes, local authorities are covered under Section 51.

Q15: How can Finodha help government contractors?

Answer:
Finodha provides:
GST registration
GST return filing
Compliance advisory
Contract-related GST support
👉 https://finodha.in/gst-return-filing/
👉 https://finodha.in/setup-business/