Section 51 of CGST Act - Tax Deduction at Source (GST TDS)
Section 51 of the Central Goods and Services Tax Act, 2017 provides for deduction of tax at source by specified Government departments, local authorities, Governmental agencies and other notified persons when payment is made or credited to a supplier under a qualifying taxable-supply contract.
Updated: 15 September 2026. The text below reflects the material amendments presently relevant to Section 51, including the substituted TDS certificate provision and the reference to Section 74A in sub-section (7).
What is GST TDS under Section 51?
GST TDS is a statutory deduction from a payment made or credited to a supplier by a person covered by Section 51. The basic Central GST deduction under Section 51 is 1 percent. For an intra-State taxable supply, the corresponding State or Union territory law generally results in an additional 1 percent deduction, making the combined GST TDS 2 percent. For an inter-State taxable supply, the deduction is generally 2 percent IGST under the IGST framework.
Section 51 - Current legal position
Sub-section (1): Persons covered, rate and threshold
Notwithstanding anything contrary in the CGST Act, the Government may require a department or establishment of the Central or State Government, a local authority, a Governmental agency, or another notified person or category of persons to deduct tax at 1 percent from payment made or credited to the supplier of taxable goods or services or both where the total value of the supply under a contract exceeds Rs. 2,50,000.
Place-of-supply exception: No deduction is made where both the location of the supplier and the place of supply are in a State or Union territory different from the State or Union territory in which the recipient is registered.
Value for the threshold: For TDS purposes, the value of supply excludes CGST, SGST, UTGST, IGST and cess indicated in the invoice.
Sub-section (2): Payment of TDS to Government
The amount deducted must be paid to the Government within the statutory time and in the prescribed manner. The return obligation for a registered TDS deductor is dealt with by Section 39(3) and the CGST Rules.
Sub-section (3): TDS certificate
A certificate of tax deduction at source must be issued in the prescribed form and manner. The earlier wording requiring specified particulars in a manually furnished certificate was substituted by the Finance Act, 2020. Under Rule 66, FORM GSTR-7A is made available electronically on the common portal.
Sub-section (4): Omitted
The former statutory late-fee provision linked specifically to delay in furnishing the TDS certificate was omitted by the Finance Act, 2020. Accordingly, the old text imposing Rs. 100 per day under Section 51(4) should not be shown as the current provision.
Sub-section (5): Credit to deductee
The deductee may claim credit of the tax deducted in the electronic cash ledger when it is reflected through the deductor's return under Section 39(3), subject to the prescribed procedure.
Sub-section (6): Interest for failure to deposit TDS
If the deductor fails to pay the deducted amount to the Government, interest is payable under Section 50(1) in addition to the TDS amount.
Sub-section (7): Determination of amount in default
The amount in default is determined in the manner specified in Section 73, Section 74 or Section 74A, as applicable. The reference to Section 74A was inserted with effect from 1 November 2024. Section 74A governs determination for tax periods from financial year 2024-25 onwards, while Sections 73 and 74 continue to be relevant for earlier periods as provided by law.
Sub-section (8): Refund
Refund arising from excess or erroneous deduction is governed by Section 54. However, refund cannot be granted to the deductor if the deducted amount has already been credited to the deductee's electronic cash ledger.
Who is required to deduct TDS?
Section 51 itself covers Government departments or establishments, local authorities and Governmental agencies. Notification No. 33/2017-Central Tax also notified specified bodies, societies and public sector undertakings. The notified categories include an authority, board or other body set up by Parliament or a State Legislature, or established by a Government, with 51 percent or more participation by way of equity or control to carry out a function; certain Government or local-authority societies; and public sector undertakings.
The TDS provisions were brought into force from 1 October 2018 by Notification No. 50/2018-Central Tax. Persons falling within the notified categories should also check subsequent notifications and exemptions applicable to their particular transaction.
GST TDS rate, Rs. 2.5 lakh limit and calculation
| Issue | Section 51 position |
|---|---|
| Threshold | Total value of taxable supply under a contract must exceed Rs. 2,50,000. |
| Tax excluded from value | CGST, SGST, UTGST, IGST and cess shown in the invoice are excluded when determining the value for deduction. |
| Intra-State supply | Ordinarily 1 percent CGST plus 1 percent SGST/UTGST, subject to the applicable law and transaction. |
| Inter-State supply | Ordinarily 2 percent IGST under the IGST provisions. |
| Place-of-supply exception | No TDS where the supplier location and place of supply are both in a State/UT different from the recipient's State/UT of registration. |
Registration, FORM GSTR-7 and FORM GSTR-7A
A person required to deduct tax under Section 51 must obtain the prescribed TDS registration. Under the registration rules, the application is made electronically in FORM GST REG-07. A deductor reports TDS through FORM GSTR-7. The current Section 39(3) requires a registered TDS deductor to furnish a return for every calendar month, whether or not deductions have been made during that month, in the prescribed form, manner and time.
Rule 66 governs the form and manner of the TDS return. FORM GSTR-7A, the TDS certificate, is made available electronically to the deductee on the common portal based on the GSTR-7 furnished by the deductor. The amount reported can be claimed by the deductee in the electronic cash ledger in accordance with Section 51(5) and the rules.
Failure to deposit TDS, demand and refund
Failure to pay the deducted amount attracts interest under Section 50. Determination of the amount in default is linked by Section 51(7) to Sections 73, 74 or 74A, depending on the period and statutory conditions. Claims for excess or erroneous deduction are governed by the CGST Act and Section 54, subject to the specific restriction in Section 51(8).
Important amendments to Section 51
Finance Act, 2020: Sub-section (3) was substituted so that the TDS certificate is issued in the prescribed form and manner, and sub-section (4) was omitted. These changes took effect from 1 January 2021.
Finance (No. 2) Act, 2024: Section 51(7) was amended to add Section 74A to the provisions used for determination of an amount in default. This amendment took effect from 1 November 2024.
Related CGST provisions
Section 49 - Payment of tax, interest, penalty and other amounts | Section 50 - Interest on delayed payment of tax | Section 52 - Collection of tax at source | Section 53 - Transfer of input tax credit