TDS on GST is a deduction of 2% that government departments, local authorities, government agencies and other notified bodies must make from payments to suppliers when the total value of a contract exceeds Rs 2.5 lakh. It is split as 1% CGST and 1% SGST for a supply inside the state, or 2% IGST for a supply from another state.
The deduction is on the taxable value, not including the GST on the invoice. It is different from income tax TDS. This page explains who deducts, how to calculate it, the returns and how the supplier gets the credit, with an example. Use the GST calculator to work out tax on any amount.
TDS on GST: codes and GST rates
Item / HSN / GST- Works contract to a municipal body, same state18%TDS 1% CGST + 1% SGST on taxable value
- Consultancy to a government department in another state18%TDS 2% IGST on taxable value
- Supply of goods to a government agency18%TDS applies above Rs 2.5 lakh contract value
- Contract value up to Rs 2.5 lakh18%No TDS under GST
- Exempt supply to a government bodyExemptNo TDS, since the supply is not taxable
Quick facts
Law
Section 51 of the CGST ActRate
2% (1% CGST + 1% SGST, or 2% IGST)Who deducts
Government departments, local authorities, government agencies, notified bodiesThreshold
Contract value above Rs 2.5 lakhReturn
Deductor files GSTR-7Supplier
Claims TDS in the electronic cash ledger
Tds on gst applicability
TDS under section 51 applies when:
- The buyer is a specified deductor: a central or state government department, a local authority, a government agency, or a body notified by the government, such as some public sector undertakings and authorities.
- The total value of supply under a contract exceeds Rs 2.5 lakh, excluding tax.
- The supply is taxable.
It does not apply when the location of the supplier and the place of supply are in one state and the recipient is registered in another state, and in some other cases set out in the law.
Gst tds rate and how to deduct: example
A contractor in the same state bills a municipal corporation: works contract under SAC 9954, taxable value Rs 10,00,000. CGST 9% Rs 90,000. SGST 9% Rs 90,000. Invoice total Rs 11,80,000. TDS under GST: 1% CGST Rs 10,000 + 1% SGST Rs 10,000 = Rs 20,000 on Rs 10,00,000. Amount paid to the contractor (before income tax TDS) Rs 11,60,000.
The deduction is on Rs 10,00,000, not on Rs 11,80,000, because GST shown on the invoice is excluded.
Returns and credit for the supplier
The deductor pays the TDS to the government and files return GSTR-7 by the 10th of the next month. The supplier sees the TDS on the GST portal, accepts it, and the amount is credited to its electronic cash ledger. It can then use that cash to pay its own GST. The deductor issues a TDS certificate (GSTR-7A).
TDS under GST and income tax TDS
Income tax TDS, such as under section 194C for contracts or 194J for professional fees, is a separate deduction under income tax law. When GST is shown separately on the invoice, income tax TDS is generally deducted on the amount excluding GST. A government buyer may therefore deduct both: 2% under GST and the income tax TDS on the same bill.
9983 hsn code tds rate and other searches
There is no separate GST TDS rate by SAC or HSN code. The 2% applies to any taxable supply to a deductor above the threshold, whether it is consultancy under 9983, works contracts under SAC 9954 or goods. Searches for "99831 hsn code tds rate" usually mean income tax TDS on professional fees, which follows income tax rules.
TCS on e-commerce and scrap
TCS under section 52 of the CGST Act is different: an e-commerce operator collects it on sellers' net sales. GST TDS on metal scrap was introduced for some scrap supplies; check the current notification if you trade in scrap, and see scrap.
This guide explains section 51 TDS in general terms. Who counts as a deductor and which contracts are covered depend on notifications, so check the current rules on the GST portal and ask a GST practitioner or chartered accountant about your government contracts.
Frequently asked questions
What is TDS under GST?
It is a 2% deduction by government departments and notified bodies from payments to suppliers on contracts above Rs 2.5 lakh.
What is the GST TDS rate?
2%: 1% CGST and 1% SGST for supplies inside the state, or 2% IGST for supplies to another state.
Is TDS deducted on the GST amount?
No. TDS under GST is calculated on the taxable value, excluding GST shown on the invoice.
How does the supplier get credit for TDS?
The supplier accepts the TDS on the GST portal, and it is credited to the electronic cash ledger.
Is GST TDS the same as income tax TDS?
No. They are separate deductions under different laws.