Amended and updated notes on section 51 of CGST Act, 2017. Detail discussion on provisions and rules related to tax deduction at source.
Chapter X (Sections 49–53A) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to payment of tax. Section 51 of CGST 2017 provides for Tax deduction at source.
Recently, we have discussed in detail section 50 (Interest on delayed payment of tax) of CGST Act 2017. Today, we learn the provisions of section 51 of Central GST Act 2017.
Section 51 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 50/2018-Central Tax, G.S.R. 868(E), dated 13.09.2018. This notification was come into force from 1st September, 2018 i.e. the commencement date of section 51 is 1-10-2018.
| Name of Act | The Central Goods and Services Tax Act 2017 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Central Board of Indirect Taxes & Customs |
| Governing body | GST Council |
| Number of Chapters | 21 |
| Number of Sections | 174 |
| You are reading: | |
| Chapter No. | X |
| Chapter Name | Payment of Tax |
| Section No. | 51 |
| Section Name | Tax deduction at source |
| Updated 2024 Edition | GST Law Book PDF |
Notes on TDS (Tax Deducted at Source) under GST Law
TDS under GST is applicable for some specified government department and notified persons. However, provisions of TDS is not applicable if Goods or Services are supplied between such specified Govt. Dept. and notified persons.
Compulsory Registration for TDS under GST Act [Section 24(vi) of CGST Act 2017]:
Compulsory registration is required for a person liable to deduct TDS under section 51 of CGST Act 2017. That means registration for deduction of tax at source is mandatory and there is no threshold limit for this.
In other words, if you have separately registered under GST Act, you have to register again as a TDS deductor under Goods and Services Tax Act.
Procedure for Registration of TDS Deductor [Section 25(6) of CGST Act 2017]:
Visit official website https://www.gst.gov.in/ for registration as TDS deductor. GST registration without Permanent Account Number (PAN) is possible. You may use your Tax Deduction Account Number (TAN) issued under the Income-tax Act in order to be eligible for grant of registration.
Registration form for TDS Deductor [Rule 12 of CGST Rules, 2017]
TDS Deductor u/s 51 shall electronically submit an application in FORM GST REG-07 for the grant of registration. Registration form must be signed or verified through electronic verification code. Submit GST registration form through common portal i.e. gst.gov.in either directly or through a notified facilitation centre.
Registration certificate issued in FORM GST REG-06 within 3 working days from the date of submission of the application. If you are no longer liable to deduct tax at source under section 51, the proper officer cancel the registration and communicate electronically in FORM GST REG-08.
TDS Deductor under GST Act [Section 51(1) of CGST Act 2017]:
Following persons are TDS deductor as per provisions of sub-section (1) of section 51 of the Central Goods and Services Act, 2017:
- Govt. Department or Establishment; or
- Local Authority; or
- Governmental Agencies; or
- Notified persons or category of persons.
TDS Provisions Not Applicable
TDS under GST shall not apply to the supply of goods or services or both which takes place between one person to another person specified under clauses (a), (b), (c) and (d) of sub-section (1) of section 51 of the CGST Act. [Notification No. 73/2018-Central Tax, dated 31.12.2018.]
TDS provisions for Ministry of Defence [Section 51(1)(a)]:
Provisions of TDS under GST are applicable only on the certain authorities of Ministry of Defence specified in the Annexure-A w.e.f. October 2018. Remaining authorities under the Ministry of Defence are exempt.
Annexure-A
CODE NUMBERS ALLOTTED TO
THE PRINCIPAL CONTROLLERS/CONTROLLERS OF DEFENCE ACCOUNTS
| Sl. No. | Designation of Controller / Office | Code No. |
| 1 | Controller of Defence Accounts, Patna | 00 |
| 2 | Pr. Controller of Defence Accounts (Pensions), Allahabad | 01 |
| 3 | Pr. Controller of Defence Accounts (Officers), Pune | 02 |
| 4 | Controller of Defence Accounts, (Army), Meerut | 03 |
| 5 | Pr. Controller of Defence Accounts, Southern Command, Pune | 04 |
| 6 | Pr. Controller of Defence Accounts, Bangalore | 05 |
| 7 | Pr. Controller of Defence Accounts, Western Command, Chandigarh | 06 |
| 8 | Pr. Controller of Accounts (Factories), Kolkata | 07 |
| 9 | Pr. Controller of Defence Accounts (Air Force), Dehradun | 08 |
| 10 | Pr. Controller of Defence Accounts (Navy), Mumbai | 09 |
| 11 | Controller of Defence Accounts (Funds), Meerut | 10 |
| 12 | Pr. Controller of Defence Accounts, Northern Command, Jammu | 12 |
| 13 | Zonal Office (Pension Disbursement), Chennai | 13 |
| 14 | AO DAD Min. of Defence (Civil), New Delhi | 14 |
| 15 | Controller of Defence Accounts, Canteen Stores Dept., Mumbai | 15 |
| 16 | Pr. Controller of Defence Accounts, New Delhi | 16 |
| 17 | Controller of Defence Accounts, Chennai | 18 |
| 18 | Pr. Controller of Defence Accounts (R&D) New Delhi | 19 |
| 19 | Controller of Defence Accounts (Pension Disbursement), Meerut | 20 |
| 20 | Controller of Defence Accounts, Gauhati | 21 |
| 21 | Pr. Controller of Defence Accounts, (CC) Lucknow | 22 |
| 22 | Pr. Controller of Defence Accounts (Border Roads), New Delhi | 23 |
| 23 | Controller of Defence Accounts (R&D), Bangalore | 24 |
| 24 | Controller of Defence Accounts, Secunderabad | 25 |
| 25 | Controller of Defence Accounts, Jabalpur | 26 |
| 26 | Pr. Controller of Defence Accounts (Air Force), New Delhi | 27 |
| 27 | Pr. Controller of Defence Accounts (R&D), Hyderabad | 28 |
| 28 | Controller of Defence Accounts, New Delhi | 29 |
| 29 | Controller of Defence Accounts (IDS), New Delhi | 30 |
| 30 | Pr. Controller of Defence Accounts (SWC), Jaipur | 31 |
Notified TDS Deductor [Section 51(1)(d)]
Central Government vide Notification No. 50/2018-Central Tax, dated 13-09-2018 has notified persons or class of persons as TDS deductor under clause (d) of sub-section (1) of section 51 of the CGST Act, 2017.
The following persons are notified TDS deductor under section 51(1)(d) of CGST Act:
- An authority/ board/ body set up by Parliament or State Legislature or established by Government, with 51% or more participation by way of equity or control, to carry out any function.
- Society established by Government or Local Authority under the Societies Registration Act, 1860.
- Public sector undertakings.
TDS Provisions for Public Sector Undertakings
TDS provisions are not applicable to the supply of goods or services or both from a public sector undertaking to another public sector undertaking, whether or not a distinct person, with effect from the 1st day of October, 2018. Vide Notification No. 61/2018-Central Tax, dated 05.11.2018.
TDS Deductee under GST
The TDS deductee is a supplier whose total value of supply of taxable goods and/or services under a single contract exceeds ₹250000 exclusive of GST tax & cess as per the invoice.
TDS Rate under GST
TDS should be deducted @1% from the payment made or credited to the supplier. TDS deducted only if the total value of supply, under a contract, exceeds ₹250000. While calculating value of supply, please exclude the central tax (CGST), State tax (SGST), Union territory tax (UTGST), integrated tax (IGST) and cess indicated in the invoice.
Please note that TDS must be deducted even if individual supplies is less than 2.5 lakh and the total value of supply under single contract is more than 2.5 lakh. Thus, individual supplies may be less than ₹250000, but if total value of supply under a contract is more than ₹250000, TDS will have to be deducted.
Section 20 of IGST Act provides that in the case of tax deducted at source, the deductor shall deduct tax at the rate of 2% from the payment made or credited to the supplier. Therefore, you have to deduct TDS @1% under CGST and @2% under IGST.
No TDS for Different Location
No need to deduct any TDS if the location of the supplier and the place of supply is different from the State or Union territory of registration of the recipient.
| Location of Supplier | Place of Supplies | Location of Recipient | TDS | GST |
| Maharashtra | Maharashtra | Kolkata | No | CGST+SGST |
| Kolkata | Kolkata | Maharashtra | No | CGST+SGST |
| Maharashtra | Maharashtra | Maharashtra | Yes | CGST+SGST |
| Kolkata | Kolkata | Kolkata | Yes | CGST+SGST |
| Maharashtra | Kolkata | Kolkata | Yes | IGST |
| Kolkata | Maharashtra | Maharashtra | Yes | IGST |
| Kolkata | Maharashtra | Kolkata | Yes | IGST |
| Maharashtra | Kolkata | Maharashtra | Yes | IGST |
The above statement can be explained with the following examples of different situations:
Example-1: Supplier, place of supply and recipient are in the same state.
It would be intra-State supply and TDS (Central plus State tax) shall be deducted. It would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
Example-2: Supplier as well as the place of supply are in different states.
In such cases, Integrated tax would be levied. TDS to be deducted would be TDS (Integrated tax) and it would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
Example-3: Supplier as well as the place of supply are in State A and the recipient is located in State B.
The supply would be intra-State supply and Central tax and State tax would be levied. In such case, transfer of TDS (Central tax + State tax of State B) to the cash ledger of the supplier (Central tax + State tax of State A) would be difficult. So, in such cases, TDS would not be deducted.
Thus, when both the supplier as well as the place of supply are different from that of the recipient, no tax deduction at source would be made.
TDS Payment to Government
Deducted TDS must be paid to the Government in prescribed manner within 10th day of next month. That means deducted TDS for the month of August 2020 shall be paid on or before 10th of September 2020. If any deductor fails to pay to the Government the amount of TDS, he shall pay interest u/s 50(1) in addition to the amount of tax deducted.
TDS Refund
Section 54 deals with the TDS refund arising because of excess or erroneous deduction. Note that TDS refund shall not be made if the amount deducted has been credited to the electronic cash ledger of the supplier.
Penalties to TDS Deductor [Section 122(1)(v)]
If TDS deductor fails to deduct TDS or fails to pay deducted TDS to the Government, he shall be liable to pay a penalty of ₹10000 or amount of the tax not deducted or short deducted or deducted but not paid to the Government, whichever is higher.
The provisions of section 73 and section 74 specifies the manner for determining the defaulted amount under section 51.
TDS Certificate to Supplier
TDS deductor provide TDS certificate in FORM GSTR-7A to the supplier. TDS deductor providing following information in TDS certificate:
- Contract Value
- TDS Rate
- Amount of TDS
- TDS paid to the Government
- Other particulars in prescribed manner
TDS certificate furnished to the supplier within 5 days of TDS payment to the Government. However, if TDS certificate not provided within 5 days of crediting the TDS amount to the Government, the deductor shall pay late fee @ ₹100/day from the day after the expiry of such five days period. TDS certificate maximum late fee is ₹5000.
GST Return for TDS Deductor [Section 39(3) of CGST Act 2017]:
Every TDS deductor shall furnish a return in FORM GSTR-7 within 10 days after the end of such month in which TDS deducted.
The details of tax deducted at source furnished by the deductor under sub-section (3) of section 39 in FORM GSTR-7 shall be made available to the deductee in Part C of FORM GSTR-2A electronically through the common portal and the said deductee may include the same in FORM GSTR-2.
Thus, the supplier shall claim credit of TDS in his electronic cash ledger in Part C of FORM GSTR-2A. However, the amount of TDS credit is limited to the tax deducted and reflected in FORM GSTR-7.
TDS deductor not required to file monthly GST return in FORM GSTR-3 and annual return in FORM GSTR-9. They also not submit GST FORM GSTR-1 under section 37 (Outward Supplies Details) and GST FORM GSTR-2 under section 38 (Inward Supplies Details) of CGST Act 2017.
TDS Exemption for Unregistered Suppliers
The CG has exempted intra-State supplies of goods or services received by TDS Deductor from unregistered supplier, subject to the condition that the deductor is not liable to be registered otherwise than under sub-clause (vi) of section 24 of the CGST Act, 2017. [Notification No. 9/2017-Central Tax (Rate) and 9/2017-Union Territory Tax (Rate), dated 28-06-2017]
Read the provisions of section 51 of CGST Act 2017 with the following CGST Sections and CGST Rules:
- Section-2(71): Location of the Supplier of Services
- Section-2(86): Place of Supply
- Section-25: Procedure for registration
- Section-37: Furnishing details of outward supplies
- Section-38: Furnishing details of inward supplies
- Section-39: Furnishing of returns
- Section-44: Annual return
- Section-122: Penalty for certain offences
- Rule-8: Application for registration
- Rule-12: Grant of registration to persons required to deduct tax at source or to collect tax at source.
- Rule-60: Form and manner of furnishing details of inward supplies
- Rule-66: Form and manner of submission of return by a person required to deduct tax at source
Recent GST Notification on TDS
The above notes on Section 51 of CGST Act 2017 updated by the following GST Notifications:
- 33/2017-Central Tax, dated 15.09.2017;
- 50/2018-Central Tax dated 13-Sept-2018;
- 57/2018-Central Tax dated 23-Oct-2018;
- 61/2018-Central Tax dated 5-Nov-2018; and
- 73/2018-Central Tax dated 31-Dec-2018.
If you have any query, please feel free to ask the same through comment section below.
Section 51 of Central GST – Tax deduction at source1
Section 51 of CGST Act 2017 shall come into force on 1.10.2018 vide Notification No. 50/2018-Central Tax, G.S.R. 868(E), dated 13.09.2018.
Section 51(1) of CGST Act
Section 51(1): Notwithstanding anything to the contrary contained in this Act, the Government
may mandate, ––
- (a) a department or establishment of the Central Government or State Government; or
- (b) local authority; or
- (c) Governmental agencies; or
- (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council,
(hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one per cent. from the payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:
Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient.
Explanation: For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.
Section 51(2) of CGST Act
Section 51(2): The amount deducted as tax under this section shall be paid to the Government by the deductor within ten days after the end of the month in which such deduction is made, in such manner as may be prescribed.
Section 51(3) of CGST Act
Section 51(3): A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed. [Sub-section (3) of section 50 was substituted by the Finance Act, 2020]
Section 51(4) of CGST Act
Section 51(4): [Omitted by the Finance Act, 2020].
Section 51(5) of CGST Act
Section 51(5): The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of section 39, in such manner as may be prescribed.
Section 51(6) of CGST Act
Section 51(6): If any deductor fails to pay to the Government the amount deducted as tax under sub-section (1), he shall pay interest in accordance with the provisions of sub-section (1) of section 50, in addition to the amount of tax deducted.
Section 51(7) of CGST Act
Section 51(7): The determination of the amount in default under this section shall be made in the manner specified in section 73 or section 74.
Section 51(8) of CGST Act
Section 51(8): The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54:
Provided that no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee.
- Section 51 of CGST Act 2017 shall come into force on 1.10.2018 vide Notification No. 50/2018-Central Tax, G.S.R. 868(E), dated 13.09.2018. ↩︎