GST TDS — GSTR-7 Filing (Government Buyers)

Tax Deducted at Source (TDS) under GST is governed by Section 51 of the CGST Act, 2017, read with Rule 66 of the CGST Rules, 2017. Specified categories of persons — notified under Section 51(1) and Notification No. 33/2017-Central Tax dated 15.09.2017 (as amended), namely Government departments/establishments, local authorities, Governmental agencies, and specified bodies/authorities/PSUs/societies with 51% or more Government equity — must deduct TDS at 2% (1% CGST + 1% SGST/UTGST for intra-state supply, or 2% IGST for inter-state supply) on payments made to a supplier of taxable goods or services, where the total value of such supply under an individual contract exceeds ₹2,50,000 (excluding the tax component shown separately in the invoice).

Deductors must compulsorily register under GST as TDS deductors (via Section 24, without benefit of the threshold exemption), regardless of whether they are otherwise liable to register. Deducted TDS must be paid to the Government within 10 days after the end of the month of deduction, and the deductor must furnish a monthly return in FORM GSTR-7 by the 10th of the succeeding month. A TDS certificate in FORM GSTR-7A is generated electronically on the common portal based on the GSTR-7 filed, and is made available to the deductee. The deductee (supplier) can claim the TDS amount as credit in their electronic cash ledger, based on the return filed by the deductor, and use it towards discharge of their own output tax liability or other dues. Late filing of GSTR-7 attracts late fee under Section 47, and failure to deduct or deposit TDS attracts interest under Section 50 and penal consequences under Section 122.

GST TDS is the tax deducted at source that the notified government departments, local authorities and the specified agencies must deduct on payments for goods or services to their suppliers. Under Section 51 of the CGST Act 2017, the notified deductors deduct TDS at the notified rate on the value of the taxable supplies, remit it with the TDS return GSTR-7 filed under Section 39, and issue the TDS certificates so the suppliers can claim the credit in their own ledgers. The deduction is the government buyer's compliance layer on every supply invoice.

The TDS is the tax withheld at the source of the payment. The supplier invoices the full amount, the deductor pays the net amount and remits the deduction, and the supplier's credit ledger receives the TDS as a credit against its own liability. The system works when the three records agree — the invoice, the GSTR-7, and the supplier's credit — and it fails when any one of them is late or wrong.

The cost of a broken TDS cycle is the blocked credit: the supplier whose TDS was deducted but not remitted or reported carries a receivable it cannot use, and the deductor whose GSTR-7 is late carries the late fee and the interest exposure under the Act. The TDS trail is a common source of disputes between government buyers and their suppliers.

This service is for government departments, PSUs and the notified deductors, and for the suppliers who deal with them. For the deductors, we manage the deduction under Section 51, the remittance, the GSTR-7 and the certificates; for the suppliers, we track the TDS reflected in the GSTR-2B against the deductions and claim the credit correctly in the returns.