Sell through Amazon, Flipkart, Meesho or any marketplace and you'll notice deductions beyond commission: small percentages skimmed under two different laws — GST TCS and income-tax TDS under 194-O. Neither is a cost if you do the paperwork: both are advance credits waiting to be claimed. But sellers who don't reconcile leak real money monthly and accumulate mismatch notices. Here is exactly what's being deducted, why, and the routine that gets every rupee back.
GST TCS: Section 52
- Every e-commerce operator collects TCS on the net taxable value of your sales through them (rate now 0.5% combined, reduced from the original 1%)
- 'Net' means sales minus returns in the month — return-heavy categories see the base swing
- The operator files GSTR-8; the collected amount appears for your acceptance on the portal
- Accepted TCS lands in your cash ledger — usable against any GST liability, or refundable
Registration note: selling goods through marketplaces requires GST registration regardless of turnover (the threshold exemption doesn't apply), which is why even tiny sellers onboard with a GSTIN. Certain notified services differ — but for goods sellers, no GSTIN, no marketplace.
Income-tax TDS: Section 194-O
Marketplaces also deduct income-tax TDS on gross sales — the rate was cut to 0.1% (from 1%) for most cases. It rides on your PAN into Form 26AS/AIS like any TDS, adjustable against your final income tax. Small-seller relief exists for individuals/HUF below ₹5 lakh of annual gross sales with PAN furnished (no deduction), and no-PAN sellers face 5%. Because 194-O applies on gross amounts before commission, your 26AS revenue figure will exceed your bank receipts — an artefact to remember when reconciling, not an error.
The monthly claim-back routine
- GST portal: open the TCS/TDS credit received tab, verify against each marketplace's settlement reports, and accept — only accepted amounts credit your cash ledger
- Use the cash-ledger balance against output liability that month (or accumulate toward refund where structurally excess)
- Match marketplace sales reports to your GSTR-1: portals report your gross sales in GSTR-8, and department software compares — returns/cancellations timing causes most 'mismatches', so document them
- Quarterly, tie 194-O credits in 26AS to marketplace statements — missing credits mean a portal misreported your PAN; raise tickets early
TCS not 'accepted' on the portal never reaches your ledger — it just sits. Sellers who skip the acceptance step for months are making an interest-free loan to the government while paying GST in cash. Calendar it monthly with your filing.
Cash-flow and pricing effects
Both levies are timing costs: roughly 0.6% of gross sales cycles through government before returning as credit — weeks for GST TCS, up to a year for 194-O (until return filing or advance-tax adjustment). High-volume thin-margin sellers should price this float in, keep working capital for it, and — where consistently cash-ledger-surplus — actually file the refunds instead of letting balances grow. Multi-state warehousing multiplies the reconciliation across GSTINs; the routine stays the same per state.
How Aidwish helps
Aidwish runs marketplace-seller compliance end to end — GSTINs and warehouse declarations, the monthly TCS acceptance and reconciliation routine, 194-O tracking into returns, and refunds where credits pile up — so platform selling stays a channel, not a tax project.