Tax Collected at Source (TCS) under GST refers to the tax that certain e-commerce operators are required to collect from the payments made to suppliers who sell goods or services through their platforms. This provision is governed by Section 52 of the Central Goods and Services Tax (CGST) Act, 2017.
Under this mechanism, when a seller receives payment for goods or services sold through an e-commerce platform, the platform collects a small percentage (currently 1%) of the net value of taxable supplies as TCS and deposits it with the government. This amount is later reflected in the seller’s GST portal, where it can be claimed as credit while filing GST returns.
TCS is applicable only when the supplier is registered under GST and is selling through a platform that qualifies as an e-commerce operator. Importantly, TCS is not applicable to services provided by the e-commerce platform itself but to the transactions it facilitates for other sellers.
For small business owners and first-time entrepreneurs using online marketplaces, TCS is an essential part of their GST compliance. It affects how payments are received, how input tax credit is claimed, and how GST returns (like GSTR-2A and GSTR-3B) are filed. Failing to account for TCS properly can lead to mismatches in returns and delays in refunds or credit claims.
Ensuring proper GST registration and understanding your obligations as a seller or e-commerce operator can simplify this process. For a complete guide on how GST impacts your business and how to stay compliant, you can explore our GST solutions at FinTax24.
In short, TCS under GST helps the government track and ensure tax compliance in digital and online transactions, while also requiring businesses to stay vigilant with their filings and reconciliations.