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A notified deductor under section 51 of the CGST Act, 2017 enters into each of the following contracts for supplies made within its own State, each worth ₹4 lakh before tax. Which does not require…

Question and options

A notified deductor under section 51 of the CGST Act, 2017 enters into each of the following contracts for supplies made within its own State, each worth ₹4 lakh before tax. Which does not require tax to be deducted at source?

  1. A contract for an exempt supply of services from a registered supplier

  2. A contract for a taxable supply of services from a registered supplier

  3. A contract for a taxable supply of goods from a registered supplier

  4. A contract for a taxable works contract service from a registered supplier

Answer and explanation

Correct answer: A - A contract for an exempt supply of services from a registered supplier

Section 51(1) of the CGST Act requires a notified deductor to deduct tax from payments to the supplier of taxable goods or services where the contract value exceeds ₹2.5 lakh. An exempt supply carries no tax to deduct, while taxable goods, services and works contracts above the threshold are all covered.

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