Tax Deduction at Source and Collection of Tax at Source: formula sheet

Key formulas

Legal basis

Section 51, CGST Act, 2017

Notified deductors deduct tax from payment to a supplier of taxable goods or services or both.

Threshold

Deduct only if value of taxable supply under a contract > ₹2,50,000

Value excludes GST shown in the invoice. Exactly ₹2,50,000 means no TDS. The test applies to each contract, not each invoice.

Rate of TDS

Intra-State: 1% CGST + 1% SGST/UTGST. Inter-State: 2% IGST

Total 2% of the taxable value.

TDS amount

TDS = 2% × (Contract taxable value excluding GST)

Use only when the supply is taxable and the other conditions are met.

Who are deductors

Government departments or establishments, local authorities, governmental agencies, and notified persons (boards, authorities, societies, PSUs)

A private company is not a deductor merely because it buys from a supplier.

Cases where no TDS is deducted

Contract value ≤ ₹2,50,000; supply not taxable; RCM applies; supplier location and place of supply both in a State different from the deductor's State of registration

State the reason in the answer. Each exclusion is a separate mark.

TDS rate under GST

TDS = 2% × taxable value of supply

Applies when total value of supply under a contract exceeds ₹2,50,000 and the location proviso does not bar deduction.

Intra-State supply split

CGST 1% + SGST/UTGST 1% of taxable value

Used when the supplier's location and the place of supply are in the same State/UT.

Inter-State supply

IGST 2% of taxable value

Used when the supplier's location and place of supply are in different States/UTs, unless the location proviso bars TDS (both are outside the deductor's State/UT).

Value for deduction

Taxable value = invoice value − GST (CGST, SGST, IGST, cess) shown in invoice

If the invoice is GST-inclusive, first back out GST.

Net payment to supplier

Net payment = amount payable − TDS

Amount payable includes GST. The deduction is on the taxable value only.

Rate of TDS

TDS = 2% of contract payment (1% CGST + 1% SGST, or 2% IGST)

Applies when the contract value (excluding GST) exceeds ₹2,50,000. The base is the payment excluding GST.

Payment and GSTR-7 due date

Due date = 10th day after the end of the month of deduction

Tax deducted in June is due by 10 July. GSTR-7 is filed by the same date.

Certificate time limit

GSTR-7A within 5 days of crediting the tax to the Government

The certificate is available on the portal after GSTR-7 is filed. It shows contract value, rate, amount deducted and amount paid.

Late fee for certificate

₹100 per day from the day after the 5-day limit; maximum ₹5,000

Counted for each day of delay after the five days.

Late fee for GSTR-7

₹100 per day under CGST + ₹100 per day under SGST/UTGST (total ₹200 per day); maximum ₹5,000 under each Act

Late fee under section 47 starts the day after the due date. For an IGST deduction, the late fee is still charged under CGST and SGST/UTGST.

Interest on late payment of tax

Interest = Tax unpaid × 18% × days of delay ÷ 365

Charged from the day after the due date until the day of payment.

Deductee credit

TDS shown in deductor's GSTR-7 → credited to deductee's electronic cash ledger

Credit does not go to the electronic credit ledger. The deductee can use it for tax payment or claim a refund.

Net value of taxable supplies

Net value = Taxable supplies made through the operator by all registered persons in the month − Taxable supplies returned to suppliers in the month

Exclude exempt, nil-rated and non-taxable supplies. Exclude services on which the operator itself pays tax under Section 9(5). Use value without GST.

TCS amount

TCS = Net value × 0.5%

Intra-state: 0.25% CGST + 0.25% SGST. Inter-state: 0.5% IGST. Compute supplier by supplier, month by month.

Payment to supplier

Amount paid to supplier = Consideration collected from customers − TCS

The operator keeps the TCS and deposits it with the government.

Deposit of TCS

Within 10 days after the end of the month of collection, that is by the 10th of the following month

Section 52(3). This is the same date as GSTR-8.

Monthly return

GSTR-8 by the 10th of the following month

Section 52(4). Filed by every operator registered to collect TCS. It falls due on the same day as the deposit. File it even if there is no collection, as a nil return.

Annual statement

By 31 December following the financial year

Gives supplier-wise details of supplies and TCS for the year (Section 52(5)).

Supplier's credit

TCS credited to the supplier's electronic cash ledger

The operator's details are made available to the supplier under Section 52(6). The credit is given on the basis of the operator's GSTR-8 (Section 52(7) and Rule 67). The supplier verifies, accepts or modifies the details shown to it.

Quick revision

• Section 51 CGST covers TDS; Section 52 covers TCS.
• TDS applies when the contract value exceeds ₹2,50,000.
• TDS value excludes GST shown in the invoice.
• TDS rate is 2%: 1% CGST plus 1% SGST if the supplier's location and the place of supply are in the same State, otherwise 2% IGST.
• Deductors are notified government bodies, local authorities and agencies, and specified notified persons.
• Deductors must register for TDS even if they are below the normal registration threshold.
• TDS is paid within 10 days after the end of the month in which the deduction is made.
• GSTR-7 is due by the 10th of the next month; the certificate (Form GSTR-7A) is issued within 5 days of crediting the deducted amount to the Government, and a late fee applies for delay.
• TCS applies to e-commerce operators on the net value of taxable supplies made through them. Net value = aggregate value of taxable supplies, less taxable supplies returned to the suppliers.
• TCS rate is 0.5%: 0.25% CGST plus 0.25% SGST, or 0.5% IGST.
• Operators file GSTR-8 by the 10th of the following month and an annual statement by 31 December following the end of the financial year.
• TDS and TCS amounts are credited to the supplier's electronic cash ledger.

Common mistakes

• Calculating the threshold on the invoice value including GST. Fix: Remove GST first. Compare only the taxable value with ₹2,50,000, and compute TDS on that same value.
• Deducting TDS when the contract value is exactly ₹2,50,000. Fix: The condition is that the value exceeds ₹2,50,000. At exactly ₹2,50,000 there is no deduction.
• Deducting 2% on the invoice value including GST. Fix: Always subtract GST first. TDS base is the taxable value.
• Testing the ₹2,50,000 limit on a single invoice. Fix: Test on the total value of supply under one contract, excluding tax.
• Computing TDS on the amount including GST. Fix: Deduct 2% on the value excluding GST, and check the ₹2,50,000 limit on the same basis.
• Counting the five days for the certificate from the date of deduction. Fix: Count five days from the date the tax is credited to the Government. Late fee runs from the next day.
• Applying 1% instead of 0.5% Fix: Use 0.5% in total. Intra-state is 0.25% + 0.25%. Inter-state is 0.5% IGST. Use 1% only if the question refers to the earlier period.
• Taking invoice value including GST as the base Fix: Take the taxable value excluding GST. Net value is based on taxable supplies, and GST is not part of the value of supply.

Exam tips

• Write the legal basis first: 'Section 51, CGST Act, 2017'. Then name the deductor category. This gives you the provision and facts marks before the conclusion.
• In numerical questions, state the contract's taxable value excluding GST before computing. Examiners often give a GST-inclusive figure as a trap.
• In MCQs, check for the exact ₹2,50,000 figure and for RCM or exempt supplies. These are the usual reasons the answer is 'no TDS'.
• Write the CGST and SGST (or IGST) split of the 2% clearly. A split of 1% + 1% for intra-State and 2% IGST for inter-State earns a mark.
• When asked 'when is TDS not required', write a short list: value not above ₹2,50,000, non-taxable supply, RCM, and the State test. Add one line of reason for each.
• Write the threshold test as the first line. Many answers lose a mark by skipping it.
• Always show the base as taxable value excluding GST, even if the question gives only the total.
• Note the deductor's State, the supplier's location and the place of supply before choosing the tax. If the supplier and place of supply are both outside the deductor's State, TDS is nil.