CGST Section 51: Tax Deduction at Source (TDS)

Provisions under Section 51 of the CGST Act 2017 relating to “Tax Deduction at Source (TDS)”:

Section 51: Tax Deduction at Source (CHAPTER X: PAYMENT OF TAX) [*1]

(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.

(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. [*1]

(3) A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed. [*2]

(4) Omitted [*3]

(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. [*1]

(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. [*1]

(7) The determination of the amount in default under this section shall be made in the manner specified in section 73 or section 74 or section 74A [*4]. [*1]

(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: [*1]

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.

Notes (History of Amendments in Bare Text):

1. CGST Section 51 introduced vide GOI Notification dated 12/04/2017, followed with CBIC Notification 50/2018 on commencement date of 01/10/2018 for certain provisions of the Section. Accordingly, the provisions of section 51 with respect to persons specified under clauses (a), (b) and (c) of sub-section (1) and the persons specified below for the purpose of clause (d) of sub-section (1) are applicable from 01/10/2018 as per above Notification, –

(a) an authority or a board or any other body, –

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government, with fifty-one per cent or more participation by way of equity or control, to carry out any function.

(b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860).

(c) public sector undertakings.

It may be noted that the date of commencement in respect of sub-sections (2), (5), (6), (7) & (8) is yet to be notified.

Please refer TDS/ TCS under GST Applicability and Exemption to understand the applicability and exemptions.

2. Sub-section (3) substituted vide Section 124 of the Finance Act 2020, followed with Notification 92/2020 on commencement date of 01/01/2021. Please refer Notification dated 12/04/2017 for text thereof before substitution.

3. Sub-section (4) omitted vide Section 124 of the Finance Act 2020, followed with Notification 92/2020 on commencement date of 01/01/2021. Please refer Notification dated 12/04/2017 for text thereof before omission.

4. In sub-section (7), the text “or section 74A” inserted after the text “section 73 or section 74”, vide Section 127 of the Finance Act (No. 2) 2024, followed with Notification 17/2024 on commencement date of 01/11/2024.