Suppliers executing government contracts or selling through electronic commerce operators often notice GST deducted under Section 51 or collected under Section 52. Unlike inward supplies reconciled in GSTR-2B, these deductions do not sit in your input tax credit ledger. Instead, they require a separate monthly acceptance return that credits your electronic cash ledger directly.
How TDS and TCS credits flow into your electronic cash ledger
Government entities, public sector undertakings, and notified recipients file Form GSTR-7 to report tax deducted at source under Section 51 of the CGST Act. Similarly, e-commerce operators file Form GSTR-8 to report tax collected at source on net supplies under Section 52. When deductors file their returns, the GST system automatically routes those invoice-level records to your dashboard in the TDS and TCS credit received tile.
Under Rule 87 of the CGST Rules, any amount deducted or collected under Section 51 or Section 52 and claimed by filing this return is credited directly to the deductee electronic cash ledger. Unlike regular input tax credit claimed in GSTR-3B under Section 16, this balance counts as cash paid into the government account. You can use it to discharge any output tax liability, reverse charge payment, or interest.
In addition, under Section 49(10) of the CGST Act and Rule 87(13), any balance standing in the electronic cash ledger can be freely reallocated across tax heads (CGST, SGST, IGST, or cess) using Form GST PMT-09. Under Rule 87(14), distinct persons sharing the same PAN across different states can also transfer unutilised cash balances to each other.
Common mistake: Assuming TDS or TCS credit flows automatically without filing the return. Viewing the records on your portal dashboard is not enough. Until you take action on each line item (Accept or Reject) and formally submit the TDS and TCS credit received return with DSC or EVC, the money will not appear in your cash ledger.
Step-by-step portal filing process
The GST portal provides a dedicated user guide on the GSTN Returns workflow for processing ledger credits. Here is how to complete the filing every month:
- Navigate to the return dashboard: Log in to the GST portal and go to Services → Returns → Returns Dashboard. Select the financial year and the relevant return period.
- Open the credit tile: Locate the tile named TDS and TCS credit received. Click on Prepare Online.
- Review the four tables: Check the auto-populated transactions across the four standard tables:
- Table 1: TDS credit received (details from Form GSTR-7 filed by government departments).
- Table 2: Amendments to TDS credit received.
- Table 3: TCS credit received (details from Form GSTR-8 filed by e-commerce operators).
- Table 4: Amendments to TCS credit received.
- Take action on each record: Click into each table. Review the deductor GSTIN, gross invoice value, and tax amounts. Select the checkbox and click Accept if the figures match your books. Click Reject only if the invoice does not belong to you or the valuation is incorrect.
- Compute totals and preview: Return to the main screen, click Compute Totals, and verify the summary draft PDF.
- File the return: Click Proceed to File, tick the verification declaration, select your authorized signatory, and file using either DSC or EVC. Once filed, your electronic cash ledger updates in real time.
Worked example: reconciling government contract TDS
Consider Apex Infrastructure Ltd, a registered contractor in Maharashtra providing civil maintenance to a municipal corporation. In October 2026, the company bills ₹10,00,000 plus 18% GST (CGST ₹90,000 and SGST ₹90,000). The municipal corporation pays the net amount after deducting 2% GST TDS (1% CGST and 1% SGST) under Section 51, amounting to ₹20,000.
At the same time, Apex sells ₹2,50,000 worth of surplus parts through an online marketplace, on which the e-commerce operator collects 1% GST TCS (0.5% CGST and 0.5% SGST) under Section 52, amounting to ₹2,500.
| Deduction type | Source return | Contract value | CGST (₹) | SGST (₹) | Total credit to cash ledger (₹) |
|---|---|---|---|---|---|
| TDS under Section 51 | GSTR-7 (Municipal Corp) | ₹10,00,000 | ₹10,000 | ₹10,000 | ₹20,000 |
| TCS under Section 52 | GSTR-8 (Marketplace) | ₹2,50,000 | ₹1,250 | ₹1,250 | ₹2,500 |
| Net monthly total | TDS & TCS Return | ₹12,50,000 | ₹11,250 | ₹11,250 | ₹22,500 |
Formula for total cash ledger credit:
Total cash credit = TDS CGST (₹10,000) + TDS SGST (₹10,000) + TCS CGST (₹1,250) + TCS SGST (₹1,250) = ₹22,500
When Apex Infrastructure files its monthly return, ₹22,500 is credited directly to its electronic cash ledger. In its GSTR-3B for October, Apex uses this cash credit to offset its monthly outward tax liability without needing to deposit fresh funds into the bank portal.
Differences between TDS/TCS return and GSTR-2B reconciliation
Accountants frequently confuse TDS and TCS claims with standard input tax credit reconciliation. While both reduce your out-of-pocket tax payout, their statutory pathways and mechanics are completely distinct:
| Parameter | TDS & TCS credit received | GSTR-2B inward ITC |
|---|---|---|
| Statutory source | Section 51 (TDS) and Section 52 (TCS) | Section 16(2) and Section 38 |
| Source return | GSTR-7 (Deductors) and GSTR-8 (ECOs) | GSTR-1, GSTR-5, and GSTR-6 |
| Ledger credited | Electronic cash ledger (Rule 87) | Electronic credit ledger (Rule 86) |
| Action required | Accept or reject line items individually | Compare against purchase register; accept or reject in IMS |
| Cross-head transfer | Permitted via Form GST PMT-09 under Rule 87(13) | Subject to strict utilization hierarchy under Section 49 |
While TDS credits build cash liquidity, regular trade suppliers must be tracked through GSTR-2B. To see how purchase invoices match with supplier filings under Section 16(2), read our comprehensive GSTR-2B reconciliation and ITC matching guide.
Handling discrepancies and missing deductor entries
If a government department or e-commerce operator fails to file Form GSTR-7 or GSTR-8 by the 10th of the following month, the transaction will not appear on your TDS and TCS dashboard. You cannot manually add new invoices in this return. The portal only allows you to accept, reject, or keep auto-populated entries pending.
Resolution workflow: If an entry is missing, contact the deductor accounts department and confirm that they filed their GSTR-7 with your exact 15-digit GSTIN. If they entered an incorrect GSTIN, they must amend the record in Table 4 of their subsequent GSTR-7 filing. Once filed, the corrected deduction appears on your portal for acceptance.
Frequently asked questions
Does TDS and TCS credit flow into the electronic credit ledger or cash ledger?
TDS and TCS credit flows directly into the electronic cash ledger, not the electronic credit ledger. Once you accept the auto-populated records and file the TDS and TCS credit received return on the GST portal, the accepted tax amount is credited to your cash ledger under CGST Rule 87.
Can TDS or TCS credited to the cash ledger be transferred using Form GST PMT-09?
Yes. Under Section 49(10) of the CGST Act and Rule 87(13), any balance available in the electronic cash ledger can be transferred between heads such as CGST, SGST, IGST, or cess using Form GST PMT-09, or to distinct entities under Rule 87(14).
What happens if you reject a TDS or TCS transaction on the portal?
If you reject an auto-populated record, the credit is not added to your cash ledger. The transaction is routed back to the deductor or e-commerce operator, who must amend the details in their subsequent GSTR-7 or GSTR-8 filing.
Reconcile your inward purchase register
While TDS and TCS credit settles in your cash ledger, your input tax credit claims depend on exact matching between your books and supplier filings. Match your monthly invoices against GSTR-2B in seconds without uploading data to external servers. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
Last checked: 26 October 2026. Sources: CBIC Section 49, CBIC Rule 87, GSTN Returns Guide.