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The following article contains a brief analysis of the TDS obligation under existing laws and GST:

TDS obligation (Section 51 of the CGST/SGST Act)



Under existing Law

Proposed under GST


Acts Governed

Respective state VAT laws



Type of Contract

Works Contract

Any Contract


Payments made by

Under TNVAT Act:

  • Central/State Government
  • Local Authority
  • Department of Central/State Government
  • Companies, including Government Companies
  • Co-operative Society
  • Educational Institutions and
  • Trust
  • A department of the Central Government or State Government
  • Local Authorities
  • Government Agencies
  • Any other persons as recommended by the GST council

(notification from the GST council notifying certain persons can be expected in the near future)


Payments made to

Any person executing works contract

Any Supplier under a contract or agreement


Threshold limit

When the total payment to the dealer exceeds Rs. 1,00,000 per year

When the aggregate payment under a contract exceeds Rs. 2,50,000


Rate of TDS

The following are the rates of TDS under TNVAT Act:

  • Civil/maintenance works contract - 2% of the total amount payable
  • Other works contract - 5% of the total amount payable

TDS at the rate of 1% where the total value of supply under a contract exceeds Rs. 2,50,000.

TDS to be deducted on the entire amount of payment, once the contract value exceeds the threshold limit.


Time limit for payment of TDS deducted

Under TNVAT Act:

On or before the 20th of the succeeding month

On or before 10th of the succeeding month



Under TNVAT Act:

On or before the 20th of the succeeding month

Return by the tax deductor for TDS to be filed within 10th of the succeeding month in  form GSTR-07


TDS Certificate

TDS certificate in Form T to be issued within 15 days from the date of deposit of tax

The deductor shall issue a certificate in Form GSTR-7A to the supplier within 5 days from the date of deposit of tax. Failure to issue the certificate within specified time shall attract late fee of Rs. 100/day up to a maximum of Rs. 5000.


Failure to deposit tax

Interest@ 2% per month or part of the month on the TDS deducted/deductible

Interest @ 1.5% per month to be paid along with the TDS amount



No TDS to be deducted in the following cases:

  • Where there is no transfer in property during execution of works contract
  • No TDS certificate in Form S is produced by the dealer
  • Transfer of property is involved in the course of inter-state trade or import

No TDS shall be deducted if the location of the supplier and the place of supply is in a different states/Union Territory from the place of registration of the recipient of Supply


Published by

Category GST   Report

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