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TDS under GST – Applicability, Rate, Provisions

The provisions of TDS and TCS is not applicable from 1st July 2017. A date will be notified in future for its applicability.


The central or state government may mandate the following enterprises to deduct TDS at the rate of 1% from the payment made or credited to a supplier for the taxable supplies of value greater than Rs. 2.5 lakh. The limit of Rs. 2.5 lakh is for a single contract and not for aggregate value.

  • a department or establishment of the Central or State Government
  • Local authority
  • Governmental agencies
  • such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council

TDS is not required to be deducted if the location of supplier and place of supply is in different state/union territory from the state/union territory in which the recipient is registered.

Tax Deduction and Collection Account  Number (TAN) issued under Income Tax Act is required by the persons who are required to deduct TDS under GST. The value of supplies will be taken as amount excluding taxes.

TDS Certificate

The deductor shall, in the manner prescribed, furnish to the deductee a certificate in Form GSTR-7A mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the appropriate Government and other particulars.

The deductor has to furnish such certificate to deductee within five days of crediting such amount to the Government. Failure to furnishing such certificate will make deductor liable for a penalty of Rs. 100 per days, maximum to Rs. 5,000.

gstr 7a

Payment and Interest on Late Payment

Payment is to be made within 10 days from the end of the month in which such tax is deducted. If deductor doesn’t pay the amount of TDS before due date then he is liable to pay interest at the rate specified. (Rate not yet specified)

Penalty on non-deduction or short deduction

Non-deduction / short deduction / non-payment or short payment of TDS is an offence under the act for which a minimum penalty of Rs 10,000/- is prescribed under the Act.

Return to be filed

Return for the month in which tax is deducted is to filed on or before 10th of the succeeding month. Only online return can be filed through Form GSTR-7, no paper return is allowed.

How can deductee claim such TDS amount?

Such amount as filed by the deductor in his return will be available to deductee in Part C of Form GSTR-2A, so that the deductee can take input tax credit by including it in his GSTR-2. This input tax credit is credit to electronic cash ledger and thus can be used for payment of tax, penalty, fee or any other amount.

Refund of wrong or excess deduction

If wrong deduction is made by deductor or the amount deducted is excess of the amount required to be deducted then a refund can be made to the deductor. If the amount wrongly or excessively deducted is credited to electronic cash ledger of the deductee then no such refund will be made.

Other GST Guides
Accounts and Records to be maintained
Composition Scheme
GST Input Tax Credit Calculator
Payment Due Dates and Interest on Late Payment
GST Returns – All you need to know
Input Tax Credit (ITC)
Time of Taxation
Understanding IGST, CGST and SGST
Valuation of Goods/Services

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