TDS › GST TDS and TCS

GST TDS and GST TCS

GST has its own TDS and TCS, separate from income tax. Most small businesses meet them in only two places: selling to the government and selling through online marketplaces.

GST TDS (section 51 of the CGST Act)

• Who deducts: government departments, local authorities, government agencies and other notified bodies.
• When: on a contract for taxable goods or services whose value is more than ₹2.5 lakh (without GST).
• Rate: 2% of the taxable value: 1% CGST + 1% SGST for a supplier in the same state, or 2% IGST from another state.
• Return: the deductor files GSTR-7 by the 10th of the next month.
• For you, the supplier: the amount appears on the GST portal as TDS credit. Accept it there and it goes to your electronic cash ledger, where you can use it to pay tax.

GST TCS (section 52)

• Who collects: e-commerce operators (online marketplaces) on the net value of taxable supplies made through them by other suppliers.
• Rate: 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) from 10 July 2024; it was 1% before.
• Return: the operator files GSTR-8 by the 10th of the next month.
• For you: accept the TCS credit on the portal; it reaches your electronic cash ledger. Match it with your marketplace settlement reports.

Example

A Bhopal printer supplies forms worth ₹3,00,000 + GST ₹54,000 to a state department. The department pays ₹3,48,000 and deducts ₹6,000 (1% CGST ₹3,000 + 1% SGST ₹3,000). The printer reports the full sale in GSTR-1, pays tax as usual in GSTR-3B, and uses the ₹6,000 credit once accepted.

Not to be mixed up with

Income-tax TDS on the same payment is separate: the department may also deduct TDS under section 393 (old 194C) on the contract. See the TDS rate chart.