Regulatory & Tax

TCS (Tax Collected at Source)

Mechanism where the seller collects tax from the buyer at the time of sale — opposite of TDS.

TCS applies to specific transactions: sale of liquor, scrap, minerals, motor vehicles above ₹10L, and most importantly for ecom, marketplace facilitator TCS u/s 52 of CGST Act (1% TCS on net consideration paid to ecom sellers) and Section 206C(1H) of Income Tax (0.1% TCS on goods sales above ₹50L).

For Indian D2C sellers on marketplaces, the marketplace deducts 1% TCS from your sales proceeds. This appears in your GSTR-2A and is claimable in your GST returns. The 0.1% income tax TCS appears in your Form 26AS.

TCS reconciliation is a monthly chore for marketplace sellers — match what each marketplace deducted, reclaim in GSTR-3B, and ensure 26AS shows correctly for income tax credit.

India context

Marketplace sellers often see ₹50K-₹2L per month locked up as TCS receivable across Amazon, Flipkart, Meesho, JioMart. Without monthly reconciliation, this becomes invisible and untraceable; with it, ITC is claimable in the same month.

Examples

  • You sell ₹10L on Amazon → ₹10,000 GST TCS + ₹1,000 IT TCS = ₹11,000 deducted by Amazon.
  • Annual sales above ₹50L trigger 0.1% IT TCS on every sale until you cross the next threshold.

FAQ

Is TCS the same as TDS?

Mechanism is opposite — TCS is collected by seller, TDS is deducted by buyer. Both end up as credit against final tax liability.

Do I need to file TCS returns?

Sellers receiving TCS don't file separate TCS returns — it shows up in GSTR-2A and Form 26AS automatically. Marketplaces (the ones collecting TCS) file the returns.

What if my marketplace TCS doesn't match my expected amount?

Reconcile every month. Most differences are timing — invoice date vs payout date. Persistent mismatches need raising with the marketplace.

Related concepts

TDSGSTR-2AForm 26ASmarketplace facilitatorecommerce

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Related glossary entries

TDS — Tax Deducted at Source — mechanism where the payer deducts income tax before paying the recipient, then deposits with the government.

More in Regulatory & Tax

DPDP ActGSTINGSTR-1GSTR-3BRCM (Reverse Charge Mechanism)ITC (Input Tax Credit)RERAFSSAI
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