TDS Under GST Law


After the GST regime gained momentum, the government decided to introduce TDS and TCS provisions. The GST law requires TDS to be deducted by certain specified government bodies/ PSUs, where the total value of supply, under a contract, exceeds Rs 2,50,000.

The recipient of supply i.e. the TDS Deductor is obligated to deduct 2% (1% CGST + 1% SGST) from the payment made or credited for taxable goods or services or both.

Challenges faced in implementation of TDS:

Ever since Goods and Service Tax (GST) has been implemented, it has really kept the taxman as well as the implementers along with the taxpayers on their toes. A whole lot of effort has gone into making compliance with the GST law simple, but clarifications have continued unabated to resolve certain issues and to convey the intention of law. Recently, the provisions relating to deduction of tax at source (TDS) have been made effective which has also created a few implementation issues. Let us briefly examine them.

FAQs under TDS on GST:

What is form GSTR-7?

Ans: Form GSTR-7 is a return which is required to be filed by the persons who deduct tax at the time of making/crediting payment to suppliers towards the inward supplies received.

Who needs to file form GSTR-7?

Ans: As per section 51 of the CGST Act, following persons/entities/establishments are required to deduct TDS.

  • A department or establishment of the Central Government or State Government;
  • Local authority
  • Governmental agencies and
  • Such persons or category of persons as may be notified by the Government on the recommendations of the Council

By when do I need to file GSTR-7?

Ans: The due date for filing Form GSTR-7 is 10th day of the succeeding month.

What are the pre-conditions for filing form GSTR-7?

Ans: Pre-conditions for filing of Form GSTR-7 are:

  • Tax Deductor should be registered as Tax Deductor and should have a valid/active GSTIN.
  • Tax Deductor should have valid User ID and password.
  • Tax Deductor should have active & non-expired/ revoked digital signature (DSC) in case return is filed through DSC.
  • Tax Deductor has made payment or credited the amount to the supplier’s account

Can the deductee take action on the TDS credit declared by deductor?

Ans: The deductee can accept/ reject the TDS details auto-populated to TDS and TCS Credit received table of his/her return. by deductee is mandatory for crediting the amount of TDS to cash ledger.

When TDS amount will be credited to deductee’s Electronic Cash Ledger?

Ans: TDS amount will be credited to deductee’s Electronic Cash Ledger only after his/ her accepting of TDS and TCS credit received (which is auto populated on filing of returns by the deductor) and filing of this relevant form.

What will happen if the TDS credit entry is rejected by the deductee?

Ans: TDS credit entries rejected by the deductee will be auto-populated into Table 4 of Form GSTR-7 and the relevant details will be required to be amended by the deductor in Form GSTR-7 of next tax period. Post correction of such details in Form GSTR-7, the data will automatically flow to concerned GSTIN (supplier) for accepting or rejecting it. This process will be repeated until TDS details are accepted by counter-party.

What happens after GSTR-7 has been filed?

Ans: After Form GSTR-7 is filed:

  • ARN is generated on successful filing of the Form GSTR-7 Return.
  • An SMS and an email are sent to the applicant on his registered mobile and email id.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."

Prepared By

Rutu M Dosh

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Ankit C Shetty