TCS Under GST for E-Commerce Sellers: How It Works

TCS under GST applies when you sell goods or services through an e-commerce operator such as an online marketplace. Under section 52 of the CGST Act, the operator collects a small percentage of the net value of taxable supplies made through its platform by other suppliers, deposits it with the government and reports it in GSTR-8. For sellers, this amount is not a cost: it becomes a credit in the electronic cash ledger that can be used to pay GST. But it must be reconciled and claimed, and many small sellers leave it unused. This guide explains how TCS is calculated, how operators and sellers comply, and how to reconcile marketplace payouts.

Who collects TCS under GST

An e-commerce operator (ECO) is a person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. ECOs must register under GST regardless of turnover, and must collect TCS on taxable supplies made by other suppliers through them, where the consideration is collected by the operator.

TCS does not apply to supplies on which the operator itself pays tax under section 9(5), such as passenger transport, accommodation, housekeeping and restaurant services through the platform. In those cases, the operator is treated as the supplier.

Rate of TCS

The TCS rate was reduced from 1% to 0.5% with effect from 10 July 2024:

Supply type	TCS rate
Intra-state	0.25% CGST + 0.25% SGST/UTGST
Inter-state	0.5% IGST

Confirm the current rate on the GST portal before computing.

How the TCS base is calculated

TCS is computed on the net value of taxable supplies: the aggregate value of taxable supplies made through the operator during the month, other than section 9(5) supplies, minus the aggregate value of taxable supplies returned to suppliers during the month. Tax is excluded from the value.

Worked example

A seller registered in Gujarat sells apparel through a marketplace in a month. All values exclude GST.

Item	Intra-state (within Gujarat)	Inter-state
Gross taxable supplies	₹6,00,000	₹4,00,000
Less returns during the month	₹50,000	₹30,000
Net value	₹5,50,000	₹3,70,000
TCS rate	0.25% CGST + 0.25% SGST	0.5% IGST
TCS collected	₹1,375 CGST + ₹1,375 SGST = ₹2,750	₹1,850 IGST

Total TCS for the month: ₹2,750 + ₹1,850 = ₹4,600. Check: 0.5% of total net value of ₹9,20,000 is ₹4,600. The operator deducts this from the seller's payout and deposits it.

Income-tax TDS on the same sales

Separately, under income-tax law, e-commerce operators deduct TDS on the gross amount of sales facilitated for sellers (formerly section 194-O, at 0.1% from 1 October 2024). On gross sales of ₹10,00,000, that would be ₹1,000. This is claimed in the seller's income-tax return, not in the GST ledger. Payout statements usually show both, and sellers should book them separately.

Operator's compliance

1. Register as an e-commerce operator collecting TCS.
2. Collect TCS on net taxable supplies made through the platform.
3. File GSTR-8 by the 10th of the following month, with supplier-wise details, and pay the TCS.
4. File the annual statement (GSTR-9B) by 31 December following the financial year.
5. Respond to the department where its data does not match suppliers' returns.

Seller's compliance

Registration

Sellers supplying goods through ECOs that collect TCS have historically needed GST registration regardless of turnover. Relaxations introduced in 2023 allow small sellers below the threshold to supply goods within their own state through ECOs without registration, subject to conditions. Service providers below the threshold selling through ECOs are generally exempt from registration. Check current conditions before relying on them.

Reporting sales

Sellers report their supplies made through ECOs in GSTR-1, including the ECO's GSTIN in the relevant table (Table 14 for supplies through ECOs on which ECO collects TCS). They pay output tax as usual in GSTR-3B; TCS is not a substitute for output tax.

Claiming TCS credit

1. After the operator files GSTR-8, open Services, Returns, TDS and TCS Credit Received on the portal.
2. Compare each entry with your marketplace payout statement and sales records.
3. Accept correct entries; reject entries that do not match your data, and inform the operator.
4. File the form. Accepted TCS is credited to your electronic cash ledger.
5. Use the cash ledger to pay output tax in GSTR-3B, or claim a refund of excess balance.

Reconciling marketplace payouts

Marketplace settlements bundle many items: sale proceeds, commissions, shipping fees, GST on those fees, TCS, income-tax TDS, return reversals and penalties. A monthly reconciliation keeps your books, GST returns and payouts aligned.

Payout component	How to book	GST impact
Gross sale value	Sales and output tax, from your invoices	Output tax in GSTR-1 and GSTR-3B
Returns	Sales returns with credit notes	Reduces output tax
Marketplace commission and fees	Expense with GST charged by the operator	ITC available if in GSTR-2B
GST TCS	GST TCS receivable	Cash ledger credit after acceptance
Income-tax TDS	Income-tax TDS receivable	None; claimed in income-tax return
Net payout	Bank receipt	None

Worked payout example

Continuing the example, the seller's net taxable value is ₹9,20,000. Suppose output GST at 5% on apparel is ₹46,000, marketplace commission and fees are ₹1,00,000 plus 18% GST of ₹18,000, TCS is ₹4,600 and income-tax TDS is ₹1,000 (on the gross ₹10,00,000). Assuming the operator collected the full price from buyers, the payout is: ₹9,20,000 + ₹46,000 minus ₹1,18,000 minus ₹4,600 minus ₹1,000 = ₹8,42,400. The seller books output tax of ₹46,000, can claim ₹18,000 ITC on commission, and has ₹4,600 of TCS to accept into the cash ledger. If the seller's net GST payable after ITC is ₹28,000 (₹46,000 minus ₹18,000), it can use the ₹4,600 cash ledger credit towards it and pay the balance of ₹23,400.

Selling on several marketplaces

Many sellers list on two or three platforms at once, plus their own website. Each operator files its own GSTR-8, so TCS credits arrive from several sources, each with its own payout cycle. A monthly control sheet helps:

Column	Purpose
Operator name and GSTIN	Identify the source of each TCS entry
Gross sales and returns per your records	Basis for your own calculation
Net value and expected TCS	What the operator should have collected
TCS per payout statement	What the operator says it collected
TCS per portal (TDS and TCS credit received)	What the operator actually reported
Action	Accept, reject or query

Sales through your own website, where you collect payment directly through a payment gateway, are not ECO supplies and do not attract TCS. A payment gateway is not an e-commerce operator for this purpose merely because it processes payments.

Timing differences to expect

TCS is computed by the operator on supplies made through its platform during the month, which may not line up exactly with the invoice dates in your books. Orders placed late in the month and delivered in the next month, cancellations after month end and returns accepted weeks after the sale can all create differences between your GSTR-1 and the operator's GSTR-8. Small, explainable timing differences are normal. Persistent differences in the same direction suggest a problem with your invoicing or the operator's reporting and are worth raising, because the department compares the two.

Month-end routine for marketplace sellers

1. Download the settlement report from each operator for the month.
2. Match orders to your invoices and returns to your credit notes.
3. Book commission and fee invoices from the operator and check them in GSTR-2B.
4. After the 10th, check TCS entries on the portal and accept or reject them.
5. File GSTR-1 with ECO details and GSTR-3B using the cash ledger credit.

Common mistakes for sellers

• Not accepting TCS credits, leaving cash with the government.
• Treating TCS as an expense in the books.
• Reporting ECO sales without the operator's GSTIN in GSTR-1, which causes mismatches with GSTR-8.
• Reporting net payout as sales instead of gross sale value.
• Not claiming ITC on marketplace commission and fees.
• Selling inter-state through marketplaces without registration.

For GSTR-1 reporting, see our GSTR-1 guide.

How Fininvo helps

Fininvo ERP records sales invoices, credit notes for returns and marketplace fees with GST in one set of books, and its ITC ledger tracks credit on platform commissions. Separate receivable ledgers can be used for GST TCS and income-tax TDS deducted from payouts. See accounting, tax compliance and pricing.

General information, not tax advice. TCS rates, registration relaxations and ECO rules change by notification; consult your CA.

Frequently Asked Questions

What is the current TCS rate under GST?

0.5% of the net value of taxable supplies since 10 July 2024: 0.25% CGST plus 0.25% SGST for intra-state supplies, or 0.5% IGST for inter-state supplies. Check the portal for later changes.

Is TCS under GST a cost for the seller?

No. It is an advance payment of GST that is credited to the seller's cash ledger and can be used to pay tax.

Is TCS collected on returns?

No. Returns during the month are deducted from gross supplies before computing TCS.

Does TCS apply to restaurant orders on food delivery apps?

No. For restaurant services through ECOs, the operator pays GST itself under section 9(5), so TCS does not apply to those supplies.

What if the TCS amount in my portal does not match the payout statement?

Reject the incorrect entry in the TDS and TCS credit received form and ask the operator to amend its GSTR-8. Accept only amounts that match your records.