What Is TDS On GST?

Are you curious to know what is TDS on GST? You have come to the right place as I am going to tell you everything about TDS on GST in a very simple explanation. Without further discussion let’s begin to know what is TDS on GST?

Tax Deducted at Source (TDS) is a mechanism implemented by the government to ensure the collection of taxes at the source of income. With the introduction of Goods and Services Tax (GST) in many countries, including India, the concept of TDS has extended to cover transactions related to GST. In this blog post, we will delve into the concept of TDS on GST, understand its significance, and explore how it impacts businesses and taxpayers.

What Is TDS On GST?

TDS on GST refers to the deduction of tax at source by certain categories of taxpayers on specific transactions as prescribed under the GST laws. Under this provision, the person making the payment, known as the deductor, is required to deduct a certain percentage of the payment as tax and remit it to the government. The amount deducted is then credited to the account of the supplier, known as the deductee.

Significance And Objectives Of TDS On GST:

TDS on GST serves several purposes, including:

  1. Increased Tax Compliance: TDS on GST aims to enhance tax compliance by ensuring that tax is deducted and deposited at the source itself. It helps in curbing tax evasion and promotes transparency in the system.
  2. Efficient Revenue Collection: By collecting tax at the source, the government ensures a regular and steady flow of revenue. This helps in meeting public expenditure requirements and managing the overall economy effectively.
  3. Simplifying Compliance: TDS on GST streamlines the compliance process by automating tax deduction and payment mechanisms. It reduces the burden on the taxpayer and simplifies the overall tax administration.

Applicability And Rates Of TDS On GST:

TDS on GST is applicable in specific scenarios and for certain categories of taxpayers. The following are some key points to consider:

  1. Threshold Limit: TDS on GST is applicable when the total value of the contract or supply exceeds a specified threshold limit, which is currently set at INR 2.5 lakhs in India.
  2. Categories of Deductors: TDS on GST is applicable to government agencies, local authorities, and certain specified categories of taxpayers as notified by the tax authorities.
  3. TDS Rates: The applicable TDS rates on GST vary depending on the nature of the transaction. Currently, the standard TDS rate is set at 2% (1% each for Central GST and State GST). However, for specific transactions or categories, different rates may apply.

Compliance And Procedural Aspects:

To comply with TDS on GST requirements, deductors must adhere to the following steps:

  1. Obtaining TAN: Deductors are required to obtain a Tax Deduction and Collection Account Number (TAN) from the tax authorities.
  2. Deduction and Payment: Deductors should deduct the applicable TDS amount at the time of making the payment to the supplier. The deducted amount must be paid to the government within the specified timeline.
  3. TDS Certificate: Deductors must issue a TDS certificate to the deductee, providing details of the deducted amount and other relevant information.


TDS on GST is an important mechanism implemented to ensure tax compliance and streamline revenue collection under the GST regime. By deducting tax at the source, it promotes transparency, reduces tax evasion, and simplifies the compliance process for businesses and taxpayers. Understanding the applicability, rates, and compliance requirements of TDS on GST is crucial for both deductors and deductees. It is advisable to consult with tax professionals or refer to official guidelines to ensure accurate compliance with TDS on GST regulations.


What Is TDS Amount On GST?

TDS under GST is required to be deducted at the rate of 2% on payments made to the supplier of taxable goods and/or services by certain notified persons under GST.

How To Use TDS In GST?

Thus, for availing GST TDS/TCS deducted by the deductors/collectors all the deductee need to file ‘TDS/TCS credit received’ tab on the portal. The deducted amount will appear in Cash Ledger which can be used for payment of balance amount of tax after setting off with the Input tax credit.

What Is TDS On GST 194q?

As per section 194Q, the buyer paying for the purchase of any goods of value exceeding INR 50 Lakhs is made liable to deduct TDS @0.1%. Section 194Q is made effective from 1st July 2021.

What Is The Purpose Of TDS?

Tax Deducted at Source, or TDS is the amount of income tax reduced by the person responsible for paying our salaries, rents, educational fees, and more as per rates prescribed by the Government. Tax Deduction at Source acts as a means of stable revenue for the Government and help manage their expenses.


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