GSTR-7: the monthly return for GST tax deducted at source

Who must deduct GST TDS?

Section 51 of the CGST Act requires certain buyers to deduct tax from payments to suppliers. Deductors include departments or establishments of the central or state government, local authorities, government agencies, and persons notified by the government, such as bodies set up by Parliament or a state legislature, public sector undertakings and societies with government participation.

These deductors must take a separate GST registration as tax deductors in Form REG-07, irrespective of turnover. Private businesses do not deduct GST TDS, although their GSTIN receives the credit when a government customer deducts it.

When is TDS deducted, and at what rate?

TDS applies where the total value of supply under a single contract exceeds ₹2.5 lakh, excluding GST. The rate is 2% of the taxable value: 1% CGST and 1% SGST for intra-state supplies, or 2% IGST for inter-state supplies. No deduction applies where the supplier's location and place of supply are in one state and the recipient is registered in another.

The deducted amount must be deposited by the 10th of the following month. The supplier sees it in its electronic cash ledger after accepting the entry, and can use it to pay its own GST.

Due date, late fee and interest

GSTR-7 is due by the 10th of the month after deduction. The late fee is ₹50 a day (₹25 CGST plus ₹25 SGST), capped at ₹2,000, and no late fee applies to a nil return following the relief notified for GSTR-7. Interest at 18% a year applies where TDS is deposited after the due date.

If the deductor fails to give the supplier the TDS certificate in time, a separate late fee of ₹100 a day, up to ₹5,000, can apply under section 51. In practice the certificate, Form GSTR-7A, is generated on the portal once GSTR-7 is filed and can be downloaded by the supplier.

What data does GSTR-7 need?

From the September 2025 tax period, GSTR-7 moved to invoice-wise reporting, so deductors now give details for each supplier invoice rather than a supplier-wise total. Keep the following for each payment.

• Supplier GSTIN and legal name
• Invoice number, date and taxable value
• Contract reference showing value above ₹2.5 lakh
• Amount deducted under CGST, SGST or IGST
• Payment date and challan details for the deposit

Common errors and consequences

Common mistakes include deducting on the invoice value including GST, deducting where the contract value is below ₹2.5 lakh, applying IGST where CGST and SGST apply, and entering a wrong supplier GSTIN. Errors can be corrected in a later GSTR-7, but suppliers who see wrong credits will raise disputes.

A deductor that fails to deduct or deposit is liable for the tax, interest and penalty, and its officers may face action. Suppliers rely on GSTR-7 to use the credit, so delays also hurt vendor relationships. Refogo's partner professionals can file GSTR-7 for deductors on a fixed fee.

Step by step

1. 1Register as a deductor

   Obtain a TDS registration in Form REG-07 if you are a notified deductor.

2. 2Deduct at 2% on qualifying contracts

   Deduct when paying suppliers under contracts above ₹2.5 lakh, excluding GST.

3. 3Deposit by the 10th

   Pay the deducted tax through a PMT-06 challan by the 10th of next month.

4. 4Prepare GSTR-7 invoice-wise

   Enter supplier GSTIN, invoice details and TDS amounts for the month.

5. 5File with DSC or EVC

   Offset the liability from the cash ledger and file; GSTR-7A becomes available to suppliers.