Skip to content

Indirect Tax Laws and Practice · TDS and TCS under GST

Credit of TDS and TCS in the Electronic Cash Ledger

Updated 11 October 2026

Tax deducted under section 51 (TDS) or collected under section 52 (TCS) is credited to the electronic cash ledger of the supplier from whom it was deducted or collected, under Rule 87(9), once the supplier claims it. For TDS, the credit must be reflected in the deductor's return under section 51(5). Raise ledger discrepancies in FORM GST PMT-04.

Understand Credit of TDS/TCS and Electronic Cash Ledger

Under GST, some recipients must deduct tax at source (TDS, section 51). E-commerce operators collect tax at source (TCS, section 52) on supplies made through them. In both cases, the deductor or collector pays the money to the Government. The supplier does not get that money in hand. So the law gives the supplier a credit.

The credit does not go to the electronic credit ledger. It goes to the electronic cash ledger (FORM GST PMT-05). Rule 87(9) provides that an amount deducted under section 51 or collected under section 52 and claimed by the registered person from whom it was deducted or collected shall be credited to his electronic cash ledger. This is why TDS/TCS credit works like cash. Once it is in your cash ledger, it forms part of the balance. That balance can be used for payments made from the cash ledger under Rule 85. For example, Rule 85(4) requires reverse charge tax, interest, penalty and fee to be paid by debiting the cash ledger. You can also claim a refund from the cash ledger, which is debited under Rule 87(10).

For TDS, section 51(5) says the deductee shall claim credit in his electronic cash ledger of the tax deducted and reflected in the return of the deductor furnished under section 39(3). So the TDS credit depends on the deductor's return. If the deductor does not file or reports a different amount, your credit does not match your books.

For TCS, Rule 87(9) provides for the credit to the cash ledger of the supplier from whom the amount was collected. Do not state any return-reporting condition for TCS unless the question or the text of section 52 gives it.

TDS and TCS differ in who acts. In TDS, the recipient (a notified deductor such as a Government department or local authority) deducts 1% from the payment to the supplier when the contract value exceeds ₹2,50,000. In TCS, the e-commerce operator collects tax on the net value of taxable supplies made through it. In both cases the amount is a credit for the supplier, not an expense.

The deductor or operator has its own payment duty. Under Rule 85(4), the amount deducted under section 51 or collected under section 52 is paid by debiting that person's own electronic cash ledger. This is separate from the supplier's credit, which sits in the supplier's cash ledger.

Mismatches are handled through the portal. A registered person who notices a discrepancy in his electronic cash ledger must communicate it to the jurisdictional officer in FORM GST PMT-04 (rule 87(12)). If a deposit is debited from the bank but no Challan Identification Number (CIN) is generated or communicated, he can represent electronically through the common portal in FORM GST PMT-07 to the bank or electronic gateway through which the deposit was initiated.

Key rules to remember

Credit entry for TDS/TCS
TDS under s.51 or TCS under s.52, as claimed by the registered person from whom it was deducted or collected → credited to his electronic cash ledger (Rule 87(9))
Not the electronic credit ledger. The supplier must claim it.
Condition for TDS credit
TDS credit claimed = tax deducted AND reflected in the deductor's return under s.39(3)
Section 51(5) applies to TDS only. If the deductor's return does not show it, credit cannot be matched. For TCS, rely on Rule 87(9) and do not add a return condition without the text of section 52.
TDS rate and threshold
TDS = 1% × value of supply (excluding taxes), if contract value > ₹2,50,000
Section 51(1). No deduction if supplier's location and place of supply are in a State/UT different from the recipient's State/UT of registration.
Deposit time for deducted tax
Deductor pays within 10 days after the end of the month of deduction
Section 51(2). Late payment attracts interest under section 50(1) (s.51(6)).
Deductor's or operator's payment of tax deducted or collected
Amount deducted under s.51 or collected under s.52 is paid by debiting the payer's own electronic cash ledger (Rule 85(4))
This is the deductor's or operator's liability. It is not paid from the supplier's TDS/TCS credit.
Supplier's cash ledger balance
Reverse charge tax, interest, penalty and fee are paid by debiting the electronic cash ledger (Rule 85(4)). TDS/TCS credit already sits in that ledger, so the balance can be used for them. A refund claimed from the ledger is debited to it (Rule 87(10)).
Rule 85(4) does not mention TDS/TCS credit. It only says these amounts are paid from the cash ledger. The credit is available because it forms part of the cash ledger balance.
Discrepancy forms
Cash ledger discrepancy: FORM GST PMT-04; debit without CIN: FORM GST PMT-07
Rule 87(12) and 87(8).
Refund of excess deduction
Refund per section 54; no refund to deductor if the amount has been credited to the deductee's cash ledger
Section 51(8) proviso.

How to solve Credit of TDS/TCS and Electronic Cash Ledger questions

Use this method for any question on credit of TDS/TCS or the cash ledger.

  1. 1Identify whether the case is TDS (section 51) or TCS (section 52) and who the deductee or supplier is.
  2. 2Find the value of supply excluding GST. Check the threshold and the inter-State proviso for TDS.
  3. 3Compute the amount deducted or collected using the rate in the question.
  4. 4For TDS, check whether the deductor reported it in the return (section 51(5)). TDS credit follows reporting. For TCS, apply Rule 87(9) and use only the conditions the question gives.
  5. 5Credit the amount to the supplier's electronic cash ledger, not the credit ledger. Show how the supplier uses it for its own liability or refund.
  6. 6If figures differ or a deposit is missing, name the remedy: PMT-04 for ledger discrepancy, PMT-07 for debit without CIN.
  7. 7State the final balance and give a one-line conclusion.

Quickest way: Three-check shortcut

When to use it: Use it for MCQs and short case questions where you must decide quickly where the credit goes and whether it is available.

  1. Check 1: Where does it go? TDS/TCS credit always lands in the supplier's electronic cash ledger.
  2. Check 2: For TDS, is it reflected in the deductor's return? If not, credit is not available yet (section 51(5)).
  3. Check 3: Which form fits the problem? Ledger error is PMT-04. Bank debit without CIN is PMT-07. Challan is PMT-06, valid 15 days.

Common mistakes in Credit of TDS/TCS and Electronic Cash Ledger

  • Crediting TDS or TCS to the electronic credit ledger.

    Students think any tax credit is input tax credit.

    Fix: Remember Rule 87(9): it goes to the electronic cash ledger. It is not ITC and has no section 16 conditions.

  • Claiming TDS credit even though the deductor did not report it in the return.

    Students rely on the supplier's books only.

    Fix: Section 51(5) links the credit to the amount reflected in the deductor's return. State this condition in the answer.

  • Computing TDS on the invoice value including GST.

    Students use the total invoice amount.

    Fix: The Explanation to section 51(1) takes value excluding central tax, State tax, UT tax, integrated tax and cess.

  • Applying TDS to an inter-State supply.

    Students forget the proviso.

    Fix: No deduction if the supplier's location and place of supply are in a different State/UT from the recipient's State/UT of registration.

  • Mixing up PMT-04 and PMT-07.

    Both deal with errors and look alike.

    Fix: PMT-04 reports any discrepancy in the cash ledger to the officer. PMT-07 is the representation to the bank when the account is debited but no CIN is generated or communicated.

  • Thinking the deductor can get a refund of tax already credited to the supplier.

    Students assume excess deduction always allows refund to the deductor.

    Fix: Refund follows section 54, but the proviso to section 51(8) bars refund to the deductor once the amount is credited to the deductee's cash ledger.

Worked examples

Example 1

A State Government department, a notified deductor, pays Anand Traders (Pune, Maharashtra) for a contract of ₹4,00,000 plus 18% GST. The department is registered in Maharashtra and the place of supply is Maharashtra. (a) Compute the TDS. (b) State where Anand Traders gets the credit and on what condition.

Show the solution
  1. Value of supply excluding GST = ₹4,00,000.
  2. Check threshold: ₹4,00,000 exceeds ₹2,50,000, so section 51 applies.
  3. Check proviso: supplier location and place of supply are in the same State as the recipient's registration, so deduction applies.
  4. TDS = 1% × ₹4,00,000 = ₹4,000.
  5. Credit goes to the electronic cash ledger of Anand Traders, as claimed by it (Rule 87(9)).
  6. Condition: the deductor's return under section 39(3) must reflect the deduction (section 51(5)).

Answer: TDS is ₹4,000, calculated on the value excluding GST. Anand Traders claims it in its electronic cash ledger, provided the deductor's return reflects it.

Example 2

Meera Enterprises has a liability of ₹9,000 as central tax payable under reverse charge and ₹1,500 as interest. Its cash ledger already shows ₹7,000 of TDS credit that it has claimed and ₹3,000 of deposited cash. It also deposited ₹2,000 by net banking, but its bank account was debited and no CIN was generated. Advise on payment and the remedy, assuming the ₹2,000 is not yet in the ledger.

Show the solution
  1. Reverse charge tax and interest must be paid by debiting the electronic cash ledger (Rule 85(4)). Meera's claimed TDS credit already sits in its cash ledger, so the cash ledger balance can be used for these liabilities.
  2. Cash ledger balance available now = ₹7,000 TDS credit + ₹3,000 deposit = ₹10,000.
  3. Total liability = ₹9,000 + ₹1,500 = ₹10,500.
  4. Shortfall now = ₹10,500 − ₹10,000 = ₹500.
  5. The ₹2,000 was debited from the bank but is not credited to the ledger. Meera should represent electronically in FORM GST PMT-07 through the common portal to the bank or electronic gateway through which the deposit was initiated (Rule 87(8)).
  6. The representation is not a guarantee of credit. The ₹2,000 reaches the ledger only if the bank or gateway generates the CIN and communicates it to the common portal (Rule 87(6) and (7)). Alternatively, under the proviso to Rule 87(8), the ledger may be updated on the basis of the RBI e-Scroll where its details match the challan in FORM GST PMT-06.
  7. Until the ₹2,000 is credited, ₹500 of the liability stays unpaid. Interest that accrues is debited to the electronic liability register (Rule 85(2)(d)), so further interest runs on the unpaid amount until it is paid. Meera may deposit ₹500 more to stop this.
  8. If the ₹2,000 is credited, the ledger balance becomes ₹10,000 + ₹2,000 = ₹12,000.
  9. Liability of ₹10,500 is then fully paid. Balance left = ₹12,000 − ₹10,500 = ₹1,500.

Answer: Meera can pay ₹10,000 now from the cash ledger, leaving ₹500 unpaid, and further interest accrues on it until it is paid. It should make a representation in FORM GST PMT-07 for the ₹2,000. That amount is credited only if the bank or gateway generates and communicates the CIN, or the ledger is updated on the RBI e-Scroll basis under the proviso to Rule 87(8). If it is credited, the ledger holds ₹12,000, the full ₹10,500 is paid and ₹1,500 remains in the cash ledger.

Exam tips

  • Write the destination ledger every time: electronic cash ledger, FORM GST PMT-05. Examiners look for this.
  • In MCQs, watch for the trap that TDS/TCS credit is ITC. It is not.
  • In case questions, check the threshold, the inter-State proviso and the value excluding GST before computing TDS.
  • Link the credit to the deductor's return under section 51(5). Mention it as the reason for any mismatch.
  • Memorise the forms: PMT-05 cash ledger, PMT-06 challan, PMT-07 bank representation, PMT-04 discrepancy, PMT-09 transfer between heads.

Practice questions from TDS and TCS under GST

Credit of TDS/TCS and Electronic Cash Ledger: frequently asked questions

How do I claim TDS credit under GST?

You do not file a separate claim in the books. Once the deductor's return under section 39(3) reflects the deduction, you claim credit in your electronic cash ledger as prescribed. The balance can then be used for payments made from the cash ledger under Rule 85, or you can claim a refund from the cash ledger.

What is the difference between TDS and TCS under GST?

TDS under section 51 is deducted by notified recipients such as Government departments from payments to suppliers. TCS under section 52 is collected by e-commerce operators on supplies made through them. In both cases the supplier gets credit in the electronic cash ledger.

Is TDS credit under GST the same as input tax credit?

No. It is credited to the electronic cash ledger, not the electronic credit ledger. So it forms part of the cash ledger balance. That balance is used for payments made from that ledger under Rule 85, such as reverse charge tax, interest and penalty, and a refund claimed from it is debited under Rule 87(10).

What if the deducted amount does not appear in my cash ledger?

First check whether the deductor has filed its return reflecting the deduction. If the ledger still shows a discrepancy, report it to the jurisdictional officer in FORM GST PMT-04 through the common portal.