TDS and TCS
AI-assisted · review in progress · last updated 25 July 2026 · jump to quick revision
In 30 seconds
- TDS (Sec 51): specified recipients deduct 1% CGST + 1% SGST (2% IGST) on payments to suppliers where the contract value exceeds ₹2,50,000.
- TCS (Sec 52): every e-commerce operator, not being an agent, collects 0.25% + 0.25% (0.5% IGST) on the net value of other suppliers' sales through its platform — no threshold, from ₹1.
- Both are audit-trail tools, not extra taxes: the amount lands in the deductee's/supplier's Electronic Cash Ledger, and Sec 20 of the IGST Act extends both to IGST.
- Both must be deposited within 10 days after month-end; TDS runs on GSTR-7 + GSTR-7A, TCS on GSTR-8 (monthly) and GSTR-9B (annual, 31 Dec).
- Chapter-map mnemonics: 'DR CIN' for TDS and 'ANN CRISP' for TCS.
Based on GST law as on 30.04.2025 (May 2026 exams onwards). Section numbers are CGST Act unless stated.
How the chapter fits together
TDS and TCS are audit-trail tools, not additional taxes. TDS (Sec 51) works from the recipient’s side — a specified recipient deducts tax when paying a supplier under a contract above ₹2.5 lakh. TCS (Sec 52) works from the platform’s side — an e-commerce operator (ECO) collects tax on consideration it collects for other suppliers’ sales through its platform. Both amounts are credited to the deductee’s/supplier’s Electronic Cash Ledger, and both are extended to IGST via Sec 20 of the IGST Act.
Two mnemonics carry the whole chapter:
- “DR CIN” for TDS — Deductor list (Govt dept / local authority / Govt agency / notified persons) → Rate 1% + 1% (2% IGST) → Contract above ₹2.5L → Interest u/s 50 on default → No-TDS proviso (different State).
- ”ANN CRISP” for TCS — Agent excluded → Net value formula → No threshold → Collect 0.25% + 0.25% (0.5% IGST) → Returns GSTR-8/9B → Interest on rectification → Sec 9(5) carve-out → Penalty ₹25,000.
The master comparison — most exam questions are settled by one row of this table:
| Feature | TDS (Sec 51) | TCS (Sec 52) |
|---|---|---|
| Trigger | Recipient pays/credits supplier | ECO collects consideration for other suppliers |
| Who | Govt dept, local authority, Govt agency, notified persons | Every ECO, not being an agent |
| Rate | 1% CGST + 1% SGST (2% IGST) | 0.25% + 0.25% CGST/SGST (0.5% IGST) |
| Threshold | Contract value above ₹2,50,000 (excl. tax/cess) | NIL — from ₹1 |
| Base | Payment/invoice value excl. GST & cess | Net value of taxable supplies (excl. Sec 9(5) services, net of returns) |
| Deposit | 10 days after month-end | 10 days after month-end |
| Certificate/statement | GSTR-7A certificate; return GSTR-7 (Sec 39(3)) | Monthly GSTR-8 (10 days); annual GSTR-9B (31 Dec) |
| Credit to | Deductee’s Electronic Cash Ledger | Concerned supplier’s Electronic Cash Ledger |
| Registration | Rule 12 (3 working days); cancellation via Rule 22 | Rule 12 (3 working days); cancellation via Rule 22 |
Key definitions
Electronic commerce operator [Sec 2(45)]
Any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. Electronic commerce [Sec 2(44)] itself covers supply of goods and services and digital products over a digital/electronic network. Trap: satisfying the definition does not create TCS liability — a person selling only his own goods on his own website is an ECO but collects no TCS (Illustration 1).
Local authority [Sec 2(69)]
An exhaustive 7-item list, clauses (a)–(g): Panchayat; Municipality; Municipal Committee / Zilla Parishad / District Board; Cantonment Board; Regional/District Council (Sixth Schedule); Development Board (Art. 371/371J); Regional Council (Art. 371A). It is a list test, not a functional test.
Net value of taxable supplies [Explanation to Sec 52]
Aggregate taxable supplies (excluding Sec 9(5) services) made through the operator by all registered persons during the month minus supplies returned during the month. Always net of returns, never gross.
Supplier and concerned supplier [Sec 2(105), Expl. to Sec 52]
“Supplier” includes an agent acting for the supplier — which is why an ECO that is purely an agent sits outside Sec 52 (“not being an agent”). “Concerned supplier” = the supplier making supplies through the ECO.
Two supporting definitions to keep in prose: taxable supply [Sec 2(108)] is a supply leviable to tax — so exempt supplies are not subject to TCS; and cess [Sec 2(22)] (per the GST (Compensation to States) Act) is excluded from the TDS value of supply along with the four taxes. Many operative TDS/TCS details flow via notification (Notif. 50/2018 and 57/2018 CT), not the bare Act.
TDS — Section 51
Who deducts [Sec 51(1)]: (a) department/establishment of Government, (b) local authority, (c) Governmental agencies, and (d) notified persons. Notified persons under clause (d) [Notif. 50/2018 CT]: an authority/board/body with 51% or more Government equity or control; a society under the Societies Registration Act, 1860; PSUs; and a registered person receiving metal scrap (Customs Tariff Chapters 72–81).
- Rate — 1% CGST + 1% SGST intra-State; 2% IGST inter-State (Sec 20, IGST Act).
- Threshold — total contract value must exceed ₹2,50,000, excluding CGST/SGST/UTGST/IGST and cess [51(1) Explanation]. Tested on the total contract value, not per invoice; value equal to ₹2,50,000 → no TDS.
- Deposit — pay the Government within 10 days after month-end [51(2)]; certificate in GSTR-7A [51(3)]; deductor’s return GSTR-7 u/s 39(3).
- Credit — deductee claims the amount in his electronic cash ledger via the deductor’s GSTR-7 [51(5)].
- Default — interest u/s 50(1) for non-payment [51(6)]; amount determined per Sec 73/74 (up to FY 2023-24) or Sec 74A (FY 2024-25 onwards) [51(7)].
- Refund — excess/erroneous deduction refunded per Sec 54, but no refund to the deductor once the amount is credited to the deductee’s cash ledger [51(8) proviso].
The no-TDS location rule (proviso to 51(1)): no TDS when the location of the supplier AND the place of supply are both in a State/UT different from the recipient’s State/UT of registration — a cash-ledger transfer across States is impossible.
| Location of supplier | Place of supply | Recipient registered in | TDS? |
|---|---|---|---|
| State X | State X | State X | Yes |
| State X | State X | State Y | No (proviso) |
| State A | State B | — | Yes — IGST |
TDS is also not required on:
- Supply from one PSU to another PSU (whether or not distinct persons).
- Inter-se supplies among persons in Sec 51(1)(a)/(b)/(c)/(d) — except clause (d): notified persons inter-se still attract TDS.
- A contract valued equal to (not exceeding) ₹2,50,000 — the value must strictly exceed it.
A deductor awards a contract of ₹20 lakh, GST charged at 18%. How much TDS is deducted?
The contract value (₹20 lakh, excluding GST and cess) exceeds ₹2,50,000, so TDS applies on the value excluding the 18% GST — 2% combined (1% CGST + 1% SGST intra-State, or 2% IGST inter-State) of ₹20 lakh = ₹40,000.
Answer: TDS = 2% × ₹20,00,000 = ₹40,000.
TCS — Section 52
Every ECO, not being an agent, must collect TCS on the net value of taxable supplies made through it by other suppliers, where the ECO collects the consideration [52(1)]. The Act caps the rate (up to 1%; IGST up to 2% under Sec 20, IGST Act); the notified rate is 0.25% CGST + 0.25% SGST (0.5% IGST). Collection is without prejudice to other modes of recovery [52(2)].
When TCS does not apply:
- Own-website seller (Illustration 1) — satisfies the ECO definition but there are no “other suppliers”.
- Own-billing reseller (Illustration 2) — buys from vendors and resells on his own website under his own billing; the sale is on his own account.
- ECO that is merely an agent — expressly outside Sec 52.
- Sec 9(5) notified services — the ECO itself pays GST under RCM, and these are excluded from net value: radio-taxi/motorcab/motorcycle transport (except omnibus); omnibus transport (except where the supplier is a company); hotel/inn/guest house/club/campsite accommodation (except a supplier liable to register u/s 22(1)); house-keeping such as plumbing/carpentering (except a supplier liable to register u/s 22(1)); restaurant service other than at specified premises.
- Exempt supplies — not taxable supplies, so no TCS.
- Supplies where the recipient pays under RCM.
- But there is no minimum threshold — TCS applies from ₹1 (the opposite of TDS).
The compliance ladder:
- Deposit within 10 days after month-end [52(3)] — e.g. July collection → deposit by 10th August.
- GSTR-8 monthly statement within 10 days of month-end [52(4)]; GSTR-9B annual statement before 31 December following the FY [52(5)].
- Rectification of a GSTR-8 omission: allowed until 30 November following the FY or the actual annual statement date, whichever is earlier; interest u/s 50(1) applies; barred if the error is found via scrutiny/audit [52(6)].
- Credit — the concerned supplier claims the collected amount in his electronic cash ledger via GSTR-8 [52(7)].
- Notice — an officer of the rank of Deputy Commissioner or above may seek supply/stock details from the operator [52(12)]; response within 15 working days [52(13)]; failure → penalty up to ₹25,000, without prejudice to Sec 122 [52(14)].
An ECO collects ₹1,120 (inclusive of 12% GST) as consideration for a supplier's sale through its platform. Compute the TCS.
Strip the 12% GST out of ₹1,120 to get the net value of taxable supplies = ₹1,000; TCS at the notified combined rate of 0.5% = ₹5.
Answer: Net value = ₹1,000; TCS @ 0.5% = ₹5.
Registration, timelines and defaults
Both TDS deductors and TCS collectors register under Rule 12 — electronic application on the common portal, registration granted within 3 working days; cancellation follows Rule 22.
| Period | Event | Where |
|---|---|---|
| 10 days after month-end | TDS deposit to Govt | 51(2) |
| 10 days after month-end | TCS deposit to Govt (July → 10 Aug) | 52(3) |
| 10 days after month-end | GSTR-8 monthly statement by ECO | 52(4) |
| 31 Dec following FY-end | GSTR-9B annual statement by ECO | 52(5) |
| 30 Nov following FY-end / actual annual statement date, whichever earlier | Last date to rectify GSTR-8 (interest u/s 50(1)) | 52(6) |
| 3 working days from application | Grant of TDS/TCS registration | Rule 12 |
| 15 working days from notice | Operator responds to Sec 52(12) notice | 52(13) |
| No fixed separate date | GSTR-7A certificate — tied to GSTR-7 filing | 51(3) |
| Default | Consequence | Where |
|---|---|---|
| TDS not deducted | Interest + amount determined/recovered per law | 51(6), 50(1) |
| TDS deducted but not paid / paid after the 10th | Interest u/s 50(1) in addition to tax | 51(6) |
| TDS default determination | Sec 73/74 (up to FY 2023-24) or Sec 74A (FY 2024-25 onwards) | 51(7) |
| Excess/erroneous TDS | Refund per Sec 54; barred for deductor once credited to deductee | 51(8) proviso |
| GSTR-8 not rectified in time | Rectification barred after 30 Nov / annual statement date | 52(6) |
| GSTR-8 rectified (allowed case) | Interest u/s 50(1) payable | 52(6) |
| No response to Sec 52(12) notice | Penalty up to ₹25,000, without prejudice to Sec 122 | 52(14) |
- Swapping the rates — TDS is 1% + 1% (2% IGST), exactly double TCS’s combined 0.25% + 0.25% (0.5% IGST).
- Testing the ₹2,50,000 limit per invoice — it applies to the total contract value (excl. GST & cess) and must be strictly exceeded; a contract of exactly ₹2.5L attracts no TDS. TCS has no threshold at all.
- Mixing up the forms — GSTR-7 is the deductor’s return u/s 39(3), GSTR-7A the TDS certificate; GSTR-8 is the ECO’s monthly statement, GSTR-9B the annual one (31 Dec).
- Equating the ECO definition [2(45)] with TCS liability [Sec 52] — the own-website seller and own-billing reseller are ECOs but collect no TCS.
- Applying TCS to Sec 9(5) services — there the ECO itself pays GST under RCM, and those supplies are excluded from net value.
- Exempting notified persons inter-se — inter-se supplies among 51(1)(a)–(c) persons escape TDS, but clause (d) notified persons inter-se still attract TDS. PSU → PSU is TDS-free; PSU → non-PSU is not.
- Confusing the 10-day deposit deadline with GSTR-3B’s 20th-of-month deadline.
- Using Sec 73/74 for recent TDS defaults — those cover periods up to FY 2023-24; Sec 74A applies from FY 2024-25 onwards.
Quick revision cards
Who must deduct TDS u/s 51?
TDS rate and threshold?
TCS rate and threshold?
Net value of taxable supplies?
When is TDS skipped despite a big contract?
TDS forms vs TCS forms?
Deposit deadline for both TDS and TCS?
GSTR-8 rectification window?
Sec 52(12) notice — who, and what response?
Own-website seller — TCS?
Where do TDS/TCS amounts land?
Registration for deductors/collectors?