Deducting TDS when not covered
A payer that is not notified should not deduct TDS under GST. Doing so reduces the supplier's cash without a valid reason.
GSTR-7 · Tax deducted at source
GSTR-7 explained: how TDS under GST is deducted, reported and credited
GSTR-7 is the monthly return for tax deducted at source (TDS) under GST. It applies to a limited group of deductors, mainly notified government bodies, who withhold part of the payment to a registered supplier and deposit it with the government. This guide covers who deducts, the 2 per cent rate, the 10th due date and how a supplier sees the TDS as credit.
Last reviewed 17 October 2026 · Independent guidance, not a government service
01 / The basics
What TDS under GST means
Tax deducted at source means the buyer keeps back part of the payment and deposits it with the government instead of paying it to the supplier. For GST, the rule covers a specific list of deductors, so most businesses never file GSTR-7.
The amount deducted is still the supplier's tax. It is credited to the supplier in its electronic ledger, and the supplier uses it against its own GST liability. The return is what makes the credit visible.
02 / Who deducts
Who has to deduct TDS
| Party | Typical situation | What they do |
|---|---|---|
| Notified government bodies | Paying registered suppliers above the notified threshold | Deduct 2 per cent and file GSTR-7 |
| Notified public sector undertakings | Procurement from registered suppliers | Deduct and deposit the TDS |
| Other private businesses | Usually not covered | No TDS unless specifically notified |
Check the notification.
Coverage depends on current notifications and thresholds. Assume a payer is covered only after you have confirmed it on the portal or in the notification.
03 / What GSTR-7 reports
The contents of the return
| Part | What it records | Why it matters |
|---|---|---|
| Supplier details | GSTIN and name of each supplier | Lets the supplier find its TDS credit |
| Value of supply | Taxable value on which TDS was deducted | Base for the 2 per cent calculation |
| TDS amount | The CGST, SGST or IGST deducted | The credit the supplier can claim |
| Tax paid | The amount deposited with the government | Settles the deductor's liability |
04 / Filing process
A simple monthly process
- 01
Record each payment
Note the invoice, the taxable value and the TDS deducted for every covered supplier payment.
- 02
Deposit the TDS
Pay the deducted amount to the government using the cash ledger on the portal.
- 03
File GSTR-7
Report the supplier-wise details and the TDS deposited by the due date.
- 04
Confirm the supplier's credit
Check that the supplier can see the TDS in its records, and resolve any mismatch promptly.
05 / Avoid these
Common GSTR-7 mistakes
Wrong supplier GSTIN
A mistyped GSTIN means the TDS goes to the wrong ledger or does not appear for the supplier.
Late deposit
TDS not deposited on time attracts interest, and the late return attracts a late fee.
Not reconciling with suppliers
Suppliers who do not see the credit are left out of pocket until the entries are fixed. Share the details promptly.
Questions people ask
Frequently asked questions
What is GSTR-7?
GSTR-7 is the monthly return filed by a person who must deduct tax at source (TDS) under GST. It reports the value of the supplies on which tax was deducted, the TDS amount, and the tax deposited with the government. The supplier then sees the TDS in their own records and can claim it as a credit against their GST liability.
Who has to deduct TDS under GST?
Certain government departments, public sector undertakings and other notified bodies must deduct TDS when they pay a registered supplier for goods or services above the threshold set in the notifications. Private businesses generally do not deduct TDS under GST unless they are specifically notified. Check the current notifications before assuming a payer is covered.
What is the TDS rate?
The usual rate is 2 per cent of the value of the taxable supply, split equally between CGST and SGST for intra-state supplies, or charged as IGST for inter-state supplies. The deductor pays the deducted amount to the government and the deductee gets credit for it.
When is GSTR-7 due?
GSTR-7 is generally due by the 10th of the month after the month in which TDS was deducted. Confirm the current due date on the GST portal, since dates can be extended by notification.
How does the supplier get credit for the TDS?
The supplier sees the TDS in their electronic credit ledger once the deductor files GSTR-7 and the TDS is credited in the supplier's records. The supplier can then use that amount to pay its own GST liability, following the normal rules.
Is TDS an extra cost to the supplier?
Not directly. The TDS is part of the payment, so the supplier receives less cash on the invoice, but gets the same amount back as credit. The cash-flow impact is what the supplier should watch, since the credit only becomes useful when it is matched and used.
What is the difference between TDS and TCS?
TDS is deducted by the buyer or payer when paying a supplier, and is reported in GSTR-7. TCS is collected by an e-commerce operator on sales made through its platform, and is reported in GSTR-8. The two sit on different parties, so the returns are different.
What is the late fee for GSTR-7?
A daily late fee applies to a late GSTR-7, up to a cap, and interest applies to any TDS not deposited on time. The amounts change by notification, so check the portal before estimating the cost of a delay.
Can a deductor correct a mistake in GSTR-7?
Yes. Corrections are made in a later return, following the amendment process on the portal. Mismatched TDS can affect the supplier's credit, so both sides should reconcile the entries and fix them together.
Is this page an official service?
No. GSTVibe is an independent guide and is not affiliated with GSTN or the tax department. We do not deduct tax or file returns for you. Confirm the rules on the GST portal and speak to an adviser about your own payments.
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This guide is informational and is not legal or tax advice. GST rules, forms and portal steps change. Confirm the current position on the official GST portal (gst.gov.in) and CBIC sources, and speak to a qualified adviser about your own facts. GSTVibe is not affiliated with GSTN or the tax department.