TDS stands for Tax Deducted at Source. Under GST, TDS is applicable when a specified person makes payment to the supplier for goods or services. The specified person is required to deduct a certain percentage of tax from the payment made to the supplier and deposit the same with the government. The supplier can claim credit for this TDS amount while filing their GST returns.
For example,
if a company hires a contractor to provide services and the contract value is Rs. 1,00,000, then as per the GST provisions, the company is required to deduct TDS at a certain percentage, say 2%. In this case, the TDS amount would be Rs. 2,000 (2% of Rs. 1,00,000). The company would then deposit this TDS amount with the government and issue a TDS certificate to the contractor. The contractor can claim this TDS amount as credit while filing their GST returns.
