The Deductee Claims the explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two things about GST TDS surprise suppliers coming from income tax. Nobody issues the certificate — the system generates it. And the credit does not arrive on its own: the supplier has to accept it, and until then real money sits idle.
Section 51(3), as substituted by section 124 of the Finance Act, 2020, notified through Notification No. 92/2020-CT dated 22.12.2020 w.e.f. 01.01.2021, now reads simply that "a certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed", and section 51(4) — the ₹100-a-day late fee for not furnishing the certificate — was omitted at the same time. Rule 66(3) makes the certificate available electronically in FORM GSTR-7A, generated from the return. Section 51(5): the deductee claims the credit in his electronic cash ledger.
The certificate, and what changed in 2021
The old section 51(3) required the deductor to "furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the Government and such other particulars."
The old section 51(4) penalised failure: "a sum of one hundred rupees per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum of five thousand rupees."
Both went on 1 January 2021. The certificate is now system-generated in GSTR-7A from the return the deductor files, so "the deductor has no separate act to perform and no late fee can attach to a certificate he does not issue."
The Handbook confirms both points: the certificate "shall be made available electronically to the deductee on the GST common Portal in Form GSTR-7A on the basis of return (Form GSTR-7) filed by the deductor"; and on late fees for delayed certificates, "this subsection was Omitted vide section 124 of The Finance Act, 2020… w.e.f. 01.01.2021."
Viewing GSTR-7A
Both sides use the same path — Services > User Services > View/Download Certificates, then the TDS Certificate link, then select the Financial Year and Return Filing Period.
As deductor: optionally enter the GSTIN of the deductee. "If GSTIN of Deductee is not entered, the downloaded certificate will contain the details of deductees for the selected relevant period."
As deductee: optionally enter the GSTIN of the deductor. "If GSTIN of Deductor is not entered, the certificate will be generated having details of all the deductors who have deducted tax in the selected relevant period."
Click SEARCH, then Download — the certificate opens in PDF.
The step the supplier must take
Rule 66(2), as amended by Notification No. 31/2019-Central Tax dated 28.06.2019: the details furnished by the deductor "shall be made available electronically to each of the deductees on the common portal after filing of FORM GSTR-7 for claiming the amount of tax deducted in his electronic cash ledger after validation."
And the Handbook sets out the action: "Deductee will login to GST portal and accept the TDS reflecting there. After acceptance, TDS will automatically reflect in his Electronic Cash Ledger."
The form is "TDS and TCS Credit Received", and the four steps are: login and navigate to it; enter details in the tiles — reject or accept action only; preview; and file with DSC or EVC.
Note that the only choices are accept and reject. There is no partial acceptance and no editing. A wrong entry must be rejected, which auto-populates it into Table 4 of the deductor's next GSTR-7 under the "Rejected by Deductee" tab for correction. GSTR-7 Tables 3 and 4 →
Until the supplier accepts, the money is with Government against its name and cannot be used. For a contractor with many government customers, an unattended TDS and TCS Credit Received queue is working capital sitting still.
What the credit is, and what it can be used for
Circular No. 166/22/2021-GST dated 17.11.2021 (S. No. 3) settles it:
"The amount deducted/collected as TDS/TCS… and credited to electronic cash ledger of the registered person, is equivalent to cash deposited in electronic cash ledger. It is not mandatory for the registered person to utilise the TDS/TCS amount credited to his electronic cash ledger only for the purpose of discharging tax liability. The registered person is at full liberty to discharge his tax liability… either through debit in electronic credit ledger or through debit in electronic cash ledger, as per his choice and availability of balance."
So the TDS credit is not earmarked. It is cash, usable for tax, interest, penalty or fee, and the supplier may equally choose to use its input tax credit first.
Refund of what cannot be used
Section 51(8): "The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54: Provided that no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee."
So only one of them can claim. As the Handbook puts it: "Such refund may be claimed either by the deductor or the deductee, but not both. Further, deductor cannot claim refund once the amount deducted has been credited to the electronic cash ledger of the deductee."
And the two-year limit does not apply. "Time limit for applying refund of 2 years from the relevant date is not applicable in case of refund of any balance in the electronic cash ledger" — the proviso to section 54(1).
Circular No. 166/22/2021 completes it: "Any amount which remains unutilized in electronic cash ledger, after discharge of tax dues and other dues payable under CGST Act and rules… can be refunded to the registered person as excess balance in electronic cash ledger in accordance with the proviso to sub-section (1) of section 54, read with sub-section (6) of section 49."
That combination is unusually favourable. Excess TDS is refundable as cash-ledger balance, with no limitation period, and without needing to show that it relates to a particular supply.
Key takeaways
- Section 51(3) was substituted and section 51(4) omitted w.e.f. 01.01.2021 — the certificate is now system-generated, and there is no late fee for a certificate.
- GSTR-7A is generated from the deductor's GSTR-7 and viewed at Services > User Services > View/Download Certificates.
- Leaving the counterparty GSTIN blank produces a consolidated certificate for the period.
- The credit reaches the electronic cash ledger only after the deductee accepts it in TDS and TCS Credit Received.
- The only actions are accept or reject; a rejection returns the entry to the deductor's next Table 4.
- TDS credit is equivalent to cash and is not earmarked for tax — Circular No. 166/22/2021.
- Refund of excess or erroneous deduction is under section 54, claimable by deductor or deductee but not both, and not by the deductor once credited to the deductee's ledger.
- No two-year limit applies to a refund of cash-ledger balance.
Read next
- GSTR-7: Tables 3 and 4, and the 2025 Changes
- TDS Interest, Late Fee and Penalty Under Section 51
- The TDS Proviso: When No Deduction Is Required
Disclaimer: Positions stated as on 5 September 2026, based on sections 49, 51 and 54 of the CGST Act, 2017, rule 66 of the CGST Rules, 2017, Notification Nos. 31/2019 and 92/2020-Central Tax and Circular No. 166/22/2021-GST dated 17 November 2021, as reproduced in the ICAI Handbook on Government Supplies under GST (Including TDS Provisions), updated to 15 April 2026.