Under section 52 of the CGST Act, an e-commerce operator collects TCS on the net value of taxable supplies made through its platform by other suppliers. Since 10 July 2024 the rate is 0.5% (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST), down from 1%. The operator reports it in GSTR-8, and the seller claims it in the electronic cash ledger.
If you sell through an online marketplace, your payout is always a little less than your sales. Part of the gap is the platform's commission and fees; another part is TCS under GST, which the platform collects from you and deposits with the government.
TCS is not a cost, but it is cash you have to track and claim. This guide explains how TCS under section 52 of the CGST Act works, the current 0.5% rate, how it is calculated, and how to make sure the credit reaches your cash ledger.
What is TCS under GST?
Tax collected at source (TCS) under GST is a collection made by an e-commerce operator (ECO) on supplies made through its platform by other suppliers. Section 52 of the CGST Act requires the operator to collect an amount at a notified rate, not exceeding one per cent, of the net value of taxable supplies made through it by other suppliers, where the operator collects the consideration.
In practice:
- The operator collects payment from the buyer.
- It deducts TCS, along with its own commission and fees, before paying you.
- It deposits the TCS with the government and reports it in GSTR-8.
- The TCS appears on the GST portal for you to accept, and is then credited to your electronic cash ledger.
Income-tax TCS and TDS on e-commerce are separate provisions with their own rates; this guide covers only GST TCS. For income-tax deductions, see TDS on invoices.
What is the current TCS rate under GST?
The GST Council, at its 53rd meeting on 22 June 2024, recommended reducing the TCS rate to ease the financial burden on suppliers selling through ECOs. The reduction was notified by Notification 15/2024-Central Tax, dated 10 July 2024, issued under section 52(1) of the CGST Act. It amended Notification 52/2018-Central Tax by replacing "half per cent" with "0.25 per cent" for the CGST portion, and came into force on publication in the Official Gazette. Matching State and IGST notifications carry the same change, which is why the combined rate is 0.5%.
| Period | Intra-state supply | Inter-state supply |
|---|---|---|
| Up to 9 July 2024 | 0.5% CGST + 0.5% SGST/UTGST (1%) | 1% IGST |
| From 10 July 2024 | 0.25% CGST + 0.25% SGST/UTGST (0.5%) | 0.5% IGST |
The PIB release on the 53rd meeting's recommendations states the reduction from 1% to 0.5% in exactly these terms. Section 52 itself caps the rate at one per cent, so any future change will come by notification within that ceiling.
How is TCS calculated on marketplace sales?
The base is the net value of taxable supplies: taxable supplies made through the operator during the month, minus the value of taxable supplies returned during the same month. It excludes:
- GST charged on the supply (the base is the taxable value),
- Services notified under section 9(5), where the operator pays the tax itself,
- Supplies not made through the operator's platform.
Worked example: a home-decor seller
A Jaipur home-decor seller sells through a marketplace in November 2026. All supplies are inter-state.
| Item | Amount |
|---|---|
| Taxable value of sales | ₹4,20,000 |
| Less: taxable value of returns in November | ₹35,000 |
| Net value of taxable supplies | ₹3,85,000 |
| TCS at 0.5% IGST | ₹1,925 |
Under the old 1% rate, TCS would have been ₹3,850, so the reduction leaves ₹1,925 more cash with the seller this month. Over a year at similar volumes, that is ₹23,100 less parked in the cash ledger.
The seller still pays the full GST on ₹4,20,000 of sales (net of returns via credit notes) through GSTR-3B. The ₹1,925 TCS in the cash ledger is simply used toward that payment.
What must the e-commerce operator do?
Under section 52, the operator:
- Collects TCS when it collects the consideration for the supply.
- Pays the amount to the government within 10 days after the end of the month in which it was collected.
- Files a monthly statement electronically, which is GSTR-8, with details of outward supplies made through it, including returns, and the amount collected.
- Files an annual statement for the financial year within the time set by the Act.
- Matches supplier details: the portal matches details in GSTR-8 with the supplier's own outward supply returns, and discrepancies are communicated to both.
Operators that are required to collect TCS must register under GST for that purpose.
How does a seller claim TCS credit?
- Check TCS on the GST portal after the operator has filed GSTR-8 for the month.
- Accept or reject the entries in the TCS credit section, comparing them with your sales records.
- Once accepted, the amount is credited to your electronic cash ledger.
- Use the balance to pay your GST liability in GSTR-3B, or seek a refund of excess balance following the refund procedure. See GST refund process.
- Reconcile monthly so you are not surprised at year-end.
Keep your own records aligned
Your GSTR-1 should report marketplace sales with the operator's GSTIN where required. If your values differ from GSTR-8, the mismatch is flagged. The most common causes are:
- Returns booked in different months by you and the operator,
- Cancelled orders the operator treated as supplies,
- Using gross value including GST instead of taxable value,
- Sales through multiple seller accounts or warehouses in different states.
For the monthly return process, see GSTR-1 filing guide.
How do you reconcile a marketplace payout?
Payouts bundle several deductions, so it helps to break them down in a fixed order.
| Component | Example (₹) | Where it goes in your books |
|---|---|---|
| Gross order value (incl. GST) | 4,95,600 | Sales + output GST |
| Less: returns refunded (incl. GST) | 41,300 | Sales returns + GST reversal (credit note) |
| Less: marketplace commission and fees (incl. GST charged by operator) | 47,200 | Expense + input tax credit if eligible |
| Less: GST TCS | 1,925 | TCS receivable (cash ledger) |
| Less: income-tax deduction, if any | as shown | TDS/TCS receivable under income tax |
| Net payout | balance | Bank |
Gross order value here is ₹4,20,000 + 18% GST = ₹4,95,600, and returns are ₹35,000 + 18% = ₹41,300. Commission is an illustrative ₹40,000 + 18% GST = ₹47,200; your actual fees will differ.
Recording each component separately means your sales, GST and receivables stay correct, and the TCS receivable can be matched against the portal.
Who counts as an e-commerce operator, and what about sellers' own websites?
Section 52 applies to an electronic commerce operator that collects the consideration for supplies made through its platform by other suppliers. Typical examples are online marketplaces where many independent sellers list goods and the platform takes the customer's payment.
TCS does not apply when:
- You sell through your own website or app and collect payment yourself through a payment gateway. A payment gateway processes money but does not make the supply through its platform in the sense of section 52.
- The operator supplies its own goods (inventory owned by the platform). There is no "other supplier" whose sales are tracked.
- The service is notified under section 9(5), where the operator itself pays the GST.
| Selling model | GST TCS under section 52? |
|---|---|
| Third-party seller on a marketplace that collects payment | Yes |
| Own website with your own payment gateway | No |
| Marketplace selling its own stock | No (no other supplier) |
| Notified section 9(5) services through an app | No (operator pays the tax) |
If you use several channels, track each one separately in your sales register so the TCS reconciliation only covers marketplace sales.
What should a monthly TCS checklist include?
- Download the operator's settlement reports for the month.
- Total taxable value of sales and of returns made through each operator.
- Calculate expected TCS at 0.5% of the net value.
- Compare with the TCS amount shown on the GST portal after the operator files GSTR-8.
- Accept matching entries; investigate or reject entries that are wrong, after contacting the operator.
- Confirm the cash ledger balance has increased by the accepted amount.
- Use the balance when paying GST in GSTR-3B.
- Note unresolved differences for follow-up next month.
Running this checklist each month takes less than an hour for most sellers and prevents an end-of-year scramble.
Worked example: a mixed month with returns
A Jaipur handicrafts seller makes intra-state and inter-state sales through one marketplace in November 2026. All figures are taxable values, excluding GST.
| Item | Intra-state | Inter-state |
|---|---|---|
| Gross taxable sales | ₹3,20,000 | ₹1,80,000 |
| Less: returns accepted in the month | ₹20,000 | ₹10,000 |
| Net value of taxable supplies | ₹3,00,000 | ₹1,70,000 |
| TCS rate | 0.25% CGST + 0.25% SGST | 0.5% IGST |
| TCS collected | ₹750 + ₹750 | ₹850 |
Total TCS for the month is ₹2,350. The seller should:
- Book ₹2,350 as "GST TCS receivable" when the payout statement shows the deduction, not as a marketplace expense.
- Check, after the operator files GSTR-8, that the same ₹750 CGST, ₹750 SGST and ₹850 IGST appear against the seller's GSTIN.
- Accept the TCS entries on the portal so the amount moves to the electronic cash ledger.
- Use the credit against output tax in the next return, and clear the receivable in the books.
If a return for an October sale is processed in November, it reduces November's net value. That timing difference is the most common reason a seller's own monthly totals do not match the operator's figures.
Common mistakes with TCS under GST
- Treating TCS as an expense instead of a receivable that becomes cash-ledger balance.
- Not accepting TCS entries on the portal, so the credit never reaches the cash ledger.
- Calculating TCS on GST-inclusive values; the base is the net taxable value.
- Using the old 1% rate in reconciliations for periods from 10 July 2024.
- Ignoring month mismatches for returns between your books and the operator's GSTR-8.
- Confusing GST TCS with income-tax deductions on the same payout.
Billing Software by Betterwork records marketplace sales with GST and credit notes for returns, and its GSTR exports make it easier to compare your figures with what the operator reported. For handling the cash side, see cash flow management for small businesses.
Key takeaways
- E-commerce operators collect GST TCS under section 52 on the net value of taxable supplies made through them.
- The rate is 0.5% from 10 July 2024 (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST), down from 1%.
- Services notified under section 9(5) are excluded because the operator pays the tax itself.
- Operators deposit TCS within 10 days after month-end and report it in GSTR-8.
- Sellers accept the entries on the portal and use the cash-ledger balance to pay GST.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.