GST glossary
TCS
Tax Collected at Source
Tax collected at source (TCS) is tax a seller, or an e-commerce operator, collects from the other side of a sale and pays to the government on their behalf. India has two kinds, one under the Income-tax Act on specified goods and one under GST on sales made through e-commerce platforms.
Why it matters to your business
If you sell through a marketplace, the operator keeps back TCS from every payout, and that money is yours to claim. If you sell scrap or other specified goods, you must collect TCS from your buyer and deposit it, or pay it from your own pocket with interest. Either way it is tax that has to be matched to the right PAN or GSTIN before anyone gets credit for it.
The two kinds of TCS
| TCS under GST | TCS under income tax | |
|---|---|---|
| Who collects | The e-commerce operator | The seller |
| On what | Net taxable sales through the platform | Specified goods, such as scrap and motor vehicles above ₹10 lakh |
| Return | GSTR-8, monthly | Quarterly TCS statement |
| Where you see the credit | GST portal, into the cash ledger | Form 26AS and AIS, against income tax |
As of October 2026, the Income-tax Act, 2025 has replaced the 1961 Act and renumbered the TCS provisions. Confirm the section and the rate for your goods with your CA.
An example
A seller of kitchenware makes net taxable sales of ₹2,00,000 through an online marketplace in September. The marketplace collects ₹1,000 as TCS (0.5%) and pays the seller the rest. In October the seller accepts the ₹1,000 on the GST portal and uses it towards the month’s GST.
Common mistakes
- Not accepting the TCS credit on the portal, so it never reaches the cash ledger.
- Treating GST TCS as an expense instead of tax paid in advance.
- Collecting income-tax TCS but depositing it late.
Questions about TCS
What is the difference between TDS and TCS?
TDS is deducted by the person making a payment, so the receiver gets less. TCS is collected by the seller over and above the price, so the buyer pays more. In both cases the tax is credited to the other person's PAN and can be set off against their own tax.
How much TCS do e-commerce operators collect under GST?
0.5% of the net value of taxable supplies made through the platform (0.25% CGST and 0.25% SGST, or 0.5% IGST), a rate that has applied since 10 July 2024. The operator reports it in GSTR-8 by the 10th of the next month.
How do I get credit for TCS collected from me by a marketplace?
The amount appears on the GST portal under TDS and TCS credit received. Accept it there and it is added to your electronic cash ledger, which you can use to pay GST.
Is TCS still collected on ordinary sales of goods above ₹50 lakh?
No. That provision of the Income-tax Act was withdrawn from 1 April 2025. Income-tax TCS continues on specified items such as scrap and motor vehicles above ₹10 lakh.
Updated .