Section 51 of CGST Act, 2017 : Section 51: Tax Deductions At Source

Explanation using Example

Imagine a scenario where the Public Works Department (PWD) of a state government is undertaking a construction project and has entered into a contract with ABC Constructions for building a new bridge. The contract value is 10 million rupees. As per Section 51 of The Central Goods and Services Tax Act, 2017, since PWD is a government department and the contract value exceeds two lakh and fifty thousand rupees, PWD is required to deduct 1% tax from each payment made to ABC Constructions.

When PWD makes a payment of 2 million rupees to ABC Constructions, it must deduct 1% (i.e., 20,000 rupees) as tax and pay the remaining 1.98 million rupees to ABC Constructions. PWD then needs to deposit the deduc...

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