GST TDS Under Section 51 — Government and PSU Deduction Compliance

Section 51 of the CGST Act 2017 provides for TDS (Tax Deduction at Source) under GST — requiring certain government and specified entities to deduct GST TDS on payments made to suppliers. This is separate from income tax TDS and operates entirely within the GST system. Here is the complete guide to GST TDS compliance.

Who Must Deduct GST TDS Under Section 51?

The following entities are required to deduct GST TDS:

• Central Government departments and State Government departments
• Local authorities (municipalities, panchayats, urban local bodies)
• Government agencies
• PSUs (Public Sector Undertakings) — entities in which government holds 51% or more equity
• Notified authorities by the government
• An authority, board or other body set up by an Act of Parliament or State Legislature

When is GST TDS Applicable?

GST TDS under Section 51 applies when:

• The total value of the supply (contract value) exceeds ₹2.5 lakh (excluding GST amount)
• Both the deductor and the supplier are in India
• The supply is intra-state (both CGST + SGST deducted) or inter-state (IGST deducted)

GST TDS Rate

• For intra-state supplies: 1% CGST + 1% SGST = 2% of the taxable value
• For inter-state supplies: 2% IGST of the taxable value
• TDS is deducted on the taxable value (excluding GST) — not on the total invoice amount

Compliance for Deductors

• The deductor must obtain a GST TDS registration (separate from regular GSTIN)
• TDS must be deposited to the government by the 10th of the following month
• File GSTR-7 (monthly TDS return) by the 10th of the following month
• Issue a TDS certificate (Form GSTR-7A) to the supplier within 5 days of filing GSTR-7

TDS Credit for Suppliers

Once the deductor files GSTR-7, the TDS amount automatically reflects in the supplier's Electronic Credit Ledger. The supplier can use this credit to pay their GST liability — or claim a refund if excess. The supplier must reconcile TDS credits reflected in their GSTR-2A/2B with the actual deductions made.

Conclusion

GST TDS under Section 51 creates a specific compliance obligation for government entities and PSUs — and a credit benefit for their suppliers. SPOTON provides complete GST TDS compliance services including GSTR-7 filing for deductors and credit reconciliation for suppliers. Contact us for expert GST compliance services.