Understanding TCS in GST: A Complete Guide for E-Commerce Sellers

Understanding TCS in GST: A Complete Guide for E-Commerce Sellers

By CA M.F. Khan
Expertise in GST, E-Commerce Compliance, and International Taxation
🔗 www.camfkhan.com

📘 What is GST TCS?

Tax Collected at Source (TCS) under GST refers to the tax that e-commerce operators (ECOs) such as Amazon, Flipkart, and Meesho are required to collect from the consideration payable to suppliers for goods or services sold through their platform.

🔄 Transaction Flow Example

📅 State-wise TCS Reporting – GSTR-8 (May 2025)

All ECOs are required to report state-wise TCS collections under Form GSTR-8. This must align with seller records to avoid mismatches.

⚠️ Mismatch Notices

Mismatches between GSTR-8 filed by the ECO and GSTR-1 by the supplier can trigger GST notices. Ensure reconciliation to avoid penalties.

✅ TCS Applicability

TCS applies when:

• The seller transacts through an ECO.

• The ECO collects payment on behalf of the seller.

TCS does not apply if:

• The ECO only facilitates the sale without handling payments.

❌ Non-Applicability Scenarios

TCS is not applicable for:

• ECOs notified under Section 9(5) (e.g., hotel booking, certain restaurant services).

• Supplies from a seller’s own website.

• Goods sold as an agent.

• Composite supply from multiple vendors.

• Exempt or import transactions.

📊 TCS Rate

• CGST: 0.25%

• SGST: 0.25%

• IGST: 0.5% (inter-state)

➡️ Effective Rate: 0.5% of net taxable value.

📝 Filing Requirements

ECOs must:

• File GSTR-8 by the 10th of every month.

• Pay TCS using the e-Cash Ledger.

Sellers will find the TCS credit reflected in their electronic cash ledger.

🔍 TCS vs. Income Tax TDS (Section 194-O)

• GST TCS is an indirect tax on supply.

• Income Tax TDS u/s 194-O is 0.1% on gross sales and is an income tax obligation.

They are governed by different laws and require separate compliance.

Thank You

M.F. Khan & Associates
A CA firm based in India, with international associations in UAE and the USA.

We specialize in:

• Indian EXIM Compliance

• E-Commerce Export

• Income Tax, Audit, GST

• UAE Corporate Tax & VAT

• USA LLC & UK VAT Services

📍 Visit us at www.camfkhan.com