TDS stands for ‘tax deducted at source’. TDS is an amount deducted at the time when payment is made to the receiver.


Under the GST Regime, the government mandates:

  • a department or establishment of the Central Government or State Government; or
  • local authority; or
  • governmental agencies; or
  • any person recommended by the council


The deductor is authorised to deduct tax at 1%rate from the payment made of taxable goods or services or both made to the supplier known as ‘deductee’.


It will be applicable only if the supply does not exceed ‘two lakh fifty thousand rupees’. It is also provided that if the location of the supplier and the place of supply are different from the registered place of recipient no TDS will be deducted. TDS under GST excludes the central tax, state tax, union territory tax, integrated tax and cess indicated in the invoice.


The amount deducted as TDS shall be credited to the government within ten days after the end of the month in which payment is made.

The deductor shall issue a certificate containing the contract value, rate of deduction, amount deducted, amount paid to the government and such other particulars to the deductee.


In case of failure to issue such certificate within five days after deducting TDS the deductor shall pay Rs100 per day as late fee to the deductee upto the maximum amount of Rs5000.

According to the GST law, the deductee shall claim credit in his electronic ledger which will be reflected in the return of the deductor. If any deductor fails to pay the deducted amount to the government he shall pay interest according to the provisions of the act. Once the amount is credited to the electronic cash ledger of the deductee, shall not be refunded to the deductor.

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