TCS under GST is tax collected at source by an e-commerce operator under Section 52 of the CGST Act. The marketplace withholds a percentage of your net taxable sales (sales less returns) from settlements, deposits it with the government and reports it. It is not a fee. You get it as credit in your electronic cash ledger. Always confirm the current notified rate.
What TCS under GST means for a marketplace seller
Section 52 of the CGST Act requires an e-commerce operator to collect tax at source (TCS) on the net value of taxable supplies made through its platform by registered sellers. In practice, the marketplace holds back a percentage of your net sales from the payout, deposits it with the government and reports it in its own GST return.
TCS is not an extra GST cost and not a marketplace fee. It is an advance deposit against your GST liability. Your settlement is lower today, and you receive the amount as credit in your electronic cash ledger later. The cash flow impact is real, so the figures need to be right.
Which rate applies: do not hard-code 1%
Many articles and searches quote 1%. The rate is fixed by government notification and has been revised in the past, so treat any number in a blog, including this one, as something to verify.
- Check the latest CBIC notification on the rate for Section 52.
- Check the rate the marketplace actually applied in your settlement report.
- Confirm with your tax adviser if the two differ.
The worked example below uses 1% only to show the arithmetic.
How the TCS base is calculated
The base is the net value of taxable supplies you made through the marketplace in a month. In simple terms:
- Start with the taxable supplies made through the platform in the month.
- Subtract taxable supplies returned during that month.
- Exclude supplies that are not taxable, such as exempt or nil-rated items.
Two points trip sellers up. First, a return processed in a later month reduces the base of the month in which it is returned, not the month of sale. Second, check whether your marketplace reports the base on a GST-exclusive value. The settlement report or the seller agreement usually states the basis; if it does not, ask support in writing.
Where TCS appears in settlements and GST records
You will see TCS in three places:
- Settlement report: a deduction line, often grouped with other taxes and fees. Keep it separate from commission when you reconcile.
- GST portal: the marketplace reports TCS against your GSTIN in its periodic return (GSTR-8). The details appear in your auto-populated statements; confirm exactly which one with your adviser.
- Electronic cash ledger: where the credit is eventually available to pay GST.
Income tax TDS under Section 194-O is a different provision under a different law. Do not mix the two in one ledger line.
Why TCS figures often do not match
- Return timing: returns fall in a different month from the sale.
- State-wise GSTINs: TCS is reported against each GSTIN, so a seller with several registrations must reconcile each one.
- Different base: gross versus net of discounts, or GST-inclusive versus exclusive values.
- Cancellations and RTOs counted differently by you and the marketplace.
- Late or incorrect reporting by the operator, so credit is missing or lower than deducted.
Each of these is fixable, but only if you catch it while the evidence is fresh.
A monthly TCS reconciliation routine
- Download the month's sales, returns and settlement reports for each marketplace and GSTIN.
- Work out the net taxable value after returns.
- Apply the current notified rate and compare with the TCS actually deducted.
- Compare the deducted amount with the TCS shown against your GSTIN on the GST portal and in the cash ledger.
- Log every gap with order-level proof and raise it with the marketplace before the next cycle.
MarketplaceMetrics by Fundle reconciles marketplace sales and settlements, checks fees against agreed terms and tracks recovery cases, so these gaps are not left in spreadsheets. Myntra Excel reports are reviewed today; other marketplaces are in scope discussion.
Worked example
Illustrative example only. The figures and the 1% rate are assumed for arithmetic; use the currently notified rate and your own reports.
| Item | Illustrative amount |
|---|---|
| Taxable sales value in the month (GST-exclusive) | ₹10,00,000 |
| Taxable value of returns in the same month | ₹1,50,000 |
| Net taxable value (base) | ₹8,50,000 |
| TCS at an assumed 1% | ₹8,500 |
| TCS shown in the settlement report | ₹9,200 |
| Difference to investigate | ₹700 |
A gap like ₹700 could come from a return counted in a different month, a different base or a wrong rate. Compare order-level data before raising the query.
Questions and answers
Is TCS under GST an additional tax on sellers?
No. TCS is an advance collection against your own GST liability, not an extra tax or a marketplace fee. It reduces your payout now and is credited to your electronic cash ledger, which you can use to pay GST. Confirm the process with your tax adviser.
Is the TCS rate on marketplace sales always 1%?
Not necessarily. The rate is set by government notification and has changed in the past. Check the latest CBIC notification, the rate applied in your settlement report and your adviser's view before you build any reconciliation on a fixed percentage.
How do I know the marketplace deposited my TCS?
Check the TCS details reported against your GSTIN on the GST portal, such as the auto-populated statements, and the credit in your electronic cash ledger. Compare them with the TCS deducted in your settlement reports for the same month and GSTIN.
Is TCS under GST the same as TDS under Section 194-O?
No. GST TCS falls under Section 52 of the CGST Act and is adjusted against GST. TDS under Section 194-O is an income tax provision with its own return and credit. Track them separately and confirm current rules with your tax adviser.