IIM Liable for GST TDS: AAR Rules Statutory Bodies Set Up by Parliament Must Deduct Tax

M/s. Indian Institute of Management, (IIMA), an institution of national importance established under the Indian Institutes of Management Act, 2017, approached the Authority for Advance Ruling regarding its liability to deduct Tax Deduction at Source (TDS) under Section 51 of the CGST Act. The institute sought clarity on whether it qualifies as a “specified person” under Notification No. 50/2018-Central Tax, given that it does not have 51% or more government equity or control. IIMA pointed to a conflict between a 2018 CBIC circular and a 2023 Supreme Court judgment (Shapoorji Pallonji case) that interpreted similar phrasing differently for statutory bodies.

The applicant requested guidance on how the INR 2,50,000 threshold for TDS should be calculated for contracts involving multiple invoices.

Main Issue: Whether IIM, being an institution set up by an Act of Parliament, qualifies as a “specified person” under Section 51 of the CGST Act and is thus required to deduct TDS from payments to suppliers. Whether the INR 2,50,000 threshold for TDS applies to the total value of the supply under a single contract, regardless of the number of invoices issued for that contract.

AAR’s Ruling: The Authority for Advance Ruling held that IIM Ahmedabad is indeed a “specified person” liable to deduct TDS under GST. Relying on Shapoorji Pallonji case, the Authority determined that the requirement of “51% or more participation by way of equity or control” applies only to entities “established by any government” and not to those “set up by an Act of Parliament.”

Since IIMA was set up by an Act of Parliament, it falls squarely under the first category of Notification No. 50/2018-CT. On the second issue, the AAR confirmed that the INR 2.5 lakh threshold must be determined based on the total value of supply under each individual contract (excluding GST). If a single contract exceeds this value, TDS must be deducted even if individual invoices raised under that contract are for smaller amounts.

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