TCS on Marketplace Sales: Why It Is Deducted and How to Get It Back

TCS is a small slice of your sales that the marketplace holds back and deposits with the government in your name. The rate is 0.5% of your net taxable sales. It is not a fee. Once you accept it on the GST portal, it lands in your electronic cash ledger and reduces the GST you pay.

Why is the marketplace holding back your money?

You open your Amazon, Flipkart or Meesho settlement and see a line called TCS. Nobody asked you. So why is it there?

Because the law tells the marketplace to do it. Section 52 says an e-commerce operator must collect an amount, at a rate the government notifies (the Act caps it at 1%), on the net value of taxable supplies made through it by other sellers, where the operator collects the payment. The idea is simple. The government wants a second record of every seller's online sales, coming from the platform and not from the seller. TCS is the hook that creates that record.

For you, the amount is small. The trail it leaves is the bigger thing. Whatever the operator reports against your GSTIN can be compared with what you report in your own GSTR-1. So treat the TCS line as a monthly reminder that someone else has already told the department what you sold.

What is the rate today?

From 10 July 2024 the total rate is 0.5%. Notification 15/2024-Central Tax cut the central half from 0.5% to 0.25%, with a matching state half. Notification 01/2024-Integrated Tax cut the rate on inter-state sales from 1% to 0.5%.

What does "net value" mean?

Net value is the total taxable value of what you sold through the operator in a month, less the taxable value of what was returned to you in that month. Taxable value means the price before GST. Returns are counted in the month they happen, not the month of the original sale. That is why TCS in a month with heavy returns can look oddly low, and why it will not always equal 0.5% of the sales figure in your head.

A worked example on Rs 1,00,000 of sales

Say you sold goods with a taxable value of Rs 1,00,000 on a marketplace in June, all to buyers in other states.

• No returns: net value is Rs 1,00,000. TCS is 0.5%, so Rs 500 goes to the government under your GSTIN.
• Returns of Rs 20,000 in the same month: net value is Rs 80,000. TCS is Rs 400.

Now the part that matters. Suppose your goods carry 5% GST. On Rs 1,00,000 your output tax is Rs 5,000. You have input tax credit of Rs 3,000 from purchases. You owe Rs 2,000. The Rs 500 TCS sits in your cash ledger, so you deposit only Rs 1,500 more. You have not lost Rs 500. You have prepaid it.

How do you get the credit back?

The operator files GSTR-8, a monthly statement listing each seller and the TCS collected, within ten days after the month ends. Only then do the entries appear on your side. They do not reach your ledger on their own. You have to accept them.

1. Log in to gst.gov.in and go to Services, then Returns, then "TDS and TCS credit received".
2. Pick the financial year and the period, click Search, then Prepare Online.
3. Open the TCS credit received tile. Each row is one operator GSTIN.
4. Check the figures against your sales reports, then Accept each row. Reject only if the row is wrong. The portal will not let you file until every row has an action.
5. Proceed to file and sign with DSC or EVC (the OTP method).

After filing, the accepted amount is credited to your electronic cash ledger. That is the ledger that holds money you have deposited with the government. Use it to pay tax when you file GSTR-3B. A rejected row goes back to the operator to correct in its next GSTR-8.

Is this the same as the TDS on your payout?

No, and mixing them up is common. Marketplace sellers face two separate deductions under two separate laws.

On Rs 1,00,000 of sales the TDS is roughly Rs 100. An individual or HUF whose sales through the operator stay within Rs 5 lakh in the year, and who has given PAN or Aadhaar, is outside this TDS. Without PAN the deduction is much higher. For payments from 1 April 2026 the same deduction sits in section 393 of the Income-tax Act 2025. The rate is reported to be unchanged.

Why does TCS credit go missing?

If the credit you expected is not there, it is nearly always one of these.

• You never filed the statement. The entries are waiting, unaccepted.
• The operator filed GSTR-8 late, so the month's rows have not arrived yet.
• Wrong GSTIN. You have registrations in two states, or the operator holds an old GSTIN for you, and the credit went elsewhere.
• Returns landed in a different month, so the net value does not match your own working.
• You rejected a row and the operator has not corrected it yet.

What to do: download the TCS statement, compare it operator by operator with your sales reports, and raise a ticket with the marketplace for any gap. The operator can correct its statement only for a limited time after the financial year ends, so do not let old months pile up.

The mistake most sellers make

They treat TCS as a marketplace charge and never claim it. A seller doing Rs 5 lakh a month leaves Rs 2,500 a month, Rs 30,000 a year, idle with the government. It is a five-minute job. Do it every month before GSTR-3B.

The second mistake is filing a GSTR-1 that does not agree with what the operator reported. The department already holds the operator's figure. Match first, then file.

Frequently asked questions

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