Introduction
Sellers who list on Amazon or Flipkart notice a smaller payout than expected and often assume something's gone wrong — it's usually TCS, a mandatory deduction with a specific, current rate and a genuine credit-back mechanism that's worth understanding precisely rather than just accepting as a mystery deduction.
Table of Contents
- The Core Definition
- The Current Rate, and Why It Changed
- Who Actually Deducts and Deposits It
- A Worked Example
- Getting It Back: TCS Credit
- The Crucial Exception: Your Own Website
- TCS vs Section 194-O TDS: Not the Same Thing
- GSTR-8: Who's Actually Filing It
- FAQ
- Conclusion
The Core Definition
TCS (Tax Collected at Source) under Section 52 of the CGST Act requires e-commerce operators — marketplace platforms like Amazon, Flipkart, or Meesho — to deduct a percentage of the net taxable value of goods sold through their platform before paying the seller, and deposit that amount directly with the government against the seller's GSTIN.
The Current Rate, and Why It Changed
The current TCS rate is 0.5% of net taxable supplies — split as 0.25% CGST + 0.25% SGST for intra-state transactions, or 0.5% IGST for inter-state transactions. This is a genuinely important, current fact worth being precise about: this rate was reduced from the earlier 1% (0.5% CGST + 0.5% SGST, or 1% IGST) effective July 10, 2024, under CBIC Notification No. 15/2024-Central Tax. Older content still citing 1% as the current rate is genuinely out of date.
Who Actually Deducts and Deposits It
The e-commerce operator — not the seller — is responsible for deducting TCS from payments due and depositing it with the government. The seller simply receives their payout net of the already-deducted TCS amount; there's no separate action the seller needs to take to have TCS deducted, since it happens automatically as part of the platform's payout process.
A Worked Example
A seller makes ₹9,50,000 in taxable sales through an intra-state marketplace transaction:
- CGST TCS: 0.25% of ₹9,50,000 = ₹2,375
- SGST TCS: 0.25% of ₹9,50,000 = ₹2,375
- Total TCS deducted: ₹4,750
The marketplace deposits this ₹4,750 against the seller's GSTIN, and pays the seller the remaining balance.
Getting It Back: TCS Credit
This is genuinely important to understand: TCS is not a permanent additional cost — the amount deducted and deposited under the seller's GSTIN becomes available as credit, which the seller claims against their own GST liability when filing returns. It functions similarly to an advance payment that reduces what's actually owed, rather than an extra expense layered on top of normal GST.
The Crucial Exception: Your Own Website
This is the distinction that causes the most genuine confusion, and it's worth stating plainly: TCS applies specifically to sales facilitated by a third-party e-commerce operator — a platform that connects independent sellers with buyers and handles payment collection on the seller's behalf. A brand selling through its own website or Shopify store is the direct seller, not routing through a third-party operator in this specific sense, so TCS simply does not apply to those sales. A brand selling on both Amazon and its own Shopify store will see TCS deducted only on the Amazon-facilitated sales — see our comparison of marketplace vs own-website GST treatment for the fuller picture.
TCS vs Section 194-O TDS: Not the Same Thing
Genuinely worth distinguishing clearly, since these are separate, easily-confused provisions:
| TCS (Section 52, GST) | TDS (Section 194-O, Income Tax) | |
|---|---|---|
| Governing law | GST (CGST Act) | Income Tax Act |
| Rate | 0.5% | 1% |
| Calculated on | Net taxable value | Gross sale value (including GST) |
| Deducted by | E-commerce operator | E-commerce operator |
A marketplace seller can genuinely be subject to both simultaneously — they serve entirely different compliance purposes under different laws, and confusing one for the other is a common, costly bookkeeping mistake.
GSTR-8: Who's Actually Filing It
GSTR-8 is the return e-commerce operators file, reporting the supplies facilitated through their platform and the TCS collected, due by the 10th of the following month. This is filed by the platform (Amazon, Flipkart) itself, not by individual sellers using the platform — a seller's own regular GSTR-1 and GSTR-3B filings are separate from this.
FAQ
0.5% of the net taxable value of supplies — split as 0.25% CGST + 0.25% SGST for intra-state transactions, or 0.5% IGST for inter-state transactions. This rate was reduced from the earlier 1% (0.5% CGST + 0.5% SGST, or 1% IGST) effective July 10, 2024, under CBIC Notification No. 15/2024-Central Tax.What is the current TCS rate on e-commerce sales in India?
The e-commerce operator (the marketplace platform, such as Amazon, Flipkart, or Meesho) is responsible for deducting TCS from payments due to sellers and depositing it with the government, not the individual seller directly. The seller receives their payout net of the deducted TCS amount.Who is responsible for collecting and depositing TCS?
Yes — the TCS amount deducted and deposited under the seller's GSTIN is available to the seller as credit, which can be claimed against their own GST liability when filing returns. It isn't a permanent additional cost; it's a prepayment that reduces the seller's net GST due.Can a seller get back the TCS deducted from their payments?
No. TCS under Section 52 is specifically an obligation placed on e-commerce operators that facilitate transactions between independent sellers and collect payment on their behalf. A brand selling directly through its own website or Shopify store is the direct seller, not going through a third-party operator, so this specific requirement doesn't apply to those sales.Does TCS apply if a brand sells only through its own website, not a marketplace?
E-commerce operators file GSTR-8, reporting the supplies facilitated through their platform and the TCS collected, by the 10th of the following month. This is a return filed by the platform (Amazon, Flipkart), not by individual sellers using the platform.What return does an e-commerce operator file for TCS?
No — these are two separate, distinct provisions that are commonly confused. TCS under GST Section 52 is a 0.5% deduction under GST law. Section 194-O TDS is a separate, 1% deduction under Income Tax law, calculated on the gross sale value (including GST). A marketplace seller can be subject to both simultaneously, and they serve different compliance purposes.Is TCS the same as TDS under Section 194-O?
Conclusion
TCS genuinely isn't the mysterious deduction it can feel like at first glance — it's a specific, current, 0.5% marketplace-operator obligation with a clear credit-back mechanism, distinct from the separate 1% Section 194-O TDS that also applies to marketplace sales. Understanding both precisely, and knowing that neither applies to your own-website sales, is what keeps multi-channel bookkeeping accurate rather than confusing.
Selling across marketplaces and your own Shopify store, and need your books to correctly track TCS credits across both? Book a free consultation — our Bookkeeping service handles exactly this kind of multi-channel reconciliation.