GST for Amazon, Flipkart and Online Sellers: TCS Explained

Businesses selling goods through an e-commerce operator like Amazon or Flipkart are required to register for GST regardless of turnover — the usual ₹20/40 lakh threshold exemption does not apply to sellers operating through these marketplaces. This is one of the most common surprises for small sellers who start selling online expecting the same threshold rules that apply to a physical shop.

E-commerce operators are required to collect Tax Collected at Source (TCS) at 0.5% on the net value of taxable supplies made through their platform, deduct it, and deposit it with the government, reporting it against the seller's GSTIN. This TCS amount is then available to the seller as a credit against their own GST liability, similar to how TDS works for income tax — but it means a portion of the seller's payout is withheld and only recovered later, once correctly reconciled against GSTR-2B.

A frequent point of confusion is reconciling the TCS credit shown in the seller's GSTR-2B against the actual sales reported by the marketplace, since discrepancies here (returns, cancellations, platform fee adjustments) are common and, left unreconciled, understate the credit a seller is entitled to claim. Sellers operating across multiple marketplaces also need to track TCS separately for each platform.

Online sellers who are new to GST registration, or established sellers whose TCS reconciliation has fallen behind, should get this reviewed periodically — the credit is real money that's frequently under-claimed simply due to reconciliation gaps. Our GST & Tax practice advises e-commerce sellers across Chennai and Tamil Nadu on registration, TCS reconciliation, and ongoing compliance.