GST TDS Obligations for Cooperative Societies in Rajasthan
A cooperative society not established by the government is not required to deduct Tax Deducted at Source (TDS) under GST.
- Ruling
- RAJ/AAR/2019-20/12 dated 19.06.2019
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The applicant asked if they must deduct GST TDS on vendor payments.
- The Authority for Advance Ruling reviewed Section 51 of the CGST Act.
- The ruling confirms the society is not a mandatory TDS deductor.
In short
The All Rajasthan Corrugated Board and Box Manufacturers Association asked if their cooperative society must deduct Tax Deducted at Source (TDS) when paying vendors for goods and services. The tax authority examined whether the society falls under the specific categories of government-linked entities required to perform this deduction.
What has changed
How it worked before
It was unclear to many private cooperative societies whether their status as a registered society under state law automatically made them liable to deduct GST TDS.
What has changed
The authority ruled that because the society was not created by the government or the Societies Registration Act, 1860, it does not have to deduct TDS. This means the society can pay its vendors the full invoice amount without withholding tax for the government.
Who this affects
Private cooperative societies and similar organizations registered under state-specific cooperative acts.
An example
Imagine a private dairy cooperative in Rajasthan that buys packaging materials from a local vendor. Before this ruling, they might have worried about withholding 2% GST TDS on those payments. Based on this decision, they now understand they are not a mandatory deductor and can continue paying their vendors without making GST TDS deductions.
What you should do
If you run a similar cooperative, you may use this ruling as a reference for your tax position. However, remember that an Advance Ruling only legally binds the specific business that requested it and their local tax office; it is not a universal law for all cooperatives.
If you do nothing
If you incorrectly assume this ruling applies to you and stop deducting TDS when you were actually required to, you may face penalties and interest for non-compliance. Conversely, if you deduct TDS unnecessarily, you create extra administrative work for yourself and your vendors. Always consult your tax advisor to confirm your specific status before changing your accounting practices.
The terms explained
- Tax Deducted at Source (TDS)
- A system where a buyer withholds a small percentage of a payment to a vendor and pays it directly to the government.
- Deductor
- A person or entity legally required by the government to withhold tax from payments made to suppliers.
- Advance Ruling
- A formal decision provided by tax authorities to clarify how tax laws apply to a specific business situation.
The ruling in detail
Authority for Advance Ruling
M/s Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd.
RAJ/AAR/2019-20/12 dated 19.06.2019 · Rajasthan
Questions before the authority
- Whether the applicant being a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965, now consolidated to Rajasthan State Co-operative Society Act, 2001 is liable to deduct tax at source (TDS) under GST from payment made to it by vendors for providing/procuring taxable goods and services for making its supplies?
Facts
The applicant is a cooperative society engaged in the manufacturing of milk and various milk products. They sought a ruling on whether they are required to deduct Tax Deducted at Source (TDS) under the GST regime on payments made to their vendors for the procurement of goods and services.
Ruling
| Question | What the authority ruled |
|---|---|
| Liability to deduct TDS under GST | Not liable to deduct tax at source The applicant does not fall under the categories specified in Section 51 of the CGST Act, 2017 |
The Authority for Advance Ruling held that the applicant is not covered under the categories of persons specified under Section 51 of the CGST Act, 2017. Consequently, the applicant is not liable to deduct tax at source on payments made to its vendors.
Reasoning
The Authority examined Section 51 of the CGST Act, 2017, which mandates TDS for specific entities such as government departments, local authorities, and governmental agencies. It also considered Notification No. 50/2018 (Central Tax) which further defines the scope of persons liable to deduct TDS. The analysis concluded that the applicant is neither established under the Societies Registration Act, 1860, nor is it constituted by any government body. Therefore, the applicant does not meet the criteria to be classified as a **deductor** under the relevant provisions.
Provisions relied on
- Section 51 of the CGST/RGST Act, 2017
- Section 97(2)(b) of the CGST/RGST Act, 2017
- Notification No. 50/2018 (Central Tax) dated 13.09.2018
For the practitioner
This ruling clarifies that a cooperative society not established by the government or under the Societies Registration Act, 1860, is **not liable to deduct TDS** under Section 51 of the GST Act. It provides a clear precedent for similar cooperative entities to avoid unnecessary compliance burdens. It does not address the taxability of the underlying supplies themselves, only the procedural obligation of TDS.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/raj.aar-2019-20_12-jaipur_zdussl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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