WebSoftOSHow it works
It is provided in section 51 of the CGST Act. The deductor deposits the tax and the supplier claims credit for it, so it is a cash-flow item, not a cost.
On a ₹50 lakh RA bill, 2% GST TDS is ₹1 lakh held back until credit is claimed.
Example
₹50,00,000 × 2% = ₹1,00,000.
Frequently asked questions
Is GST TDS a cost to the contractor?
No. It is deducted from the payment but credited to the contractor’s electronic cash ledger, so it is a cash-flow timing item.