Selling on Amazon, Flipkart, Meesho or any online marketplace comes with GST rules that catch many first-time sellers off guard — GST registration is compulsory the moment you sell through a platform, regardless of how small your turnover is, and every sale has tax collected at source before you even receive the payment. Here's exactly how it works and what you need to track.
Quick Summary
- GST registration: compulsory for every e-commerce seller, no turnover threshold (Section 24(ix))
- TCS rate: 0.5% of net taxable sales value (0.25% CGST + 0.25% SGST intra-state, or 0.5% IGST inter-state)
- Who deducts it: the platform, before paying you — deposited to government via their GSTR-8
- What you do with it: claim it as credit in GSTR-3B against your GST liability, not lost money
- Composition dealers: cannot sell through e-commerce operators at all
Registration Is Compulsory — No Threshold Exemption
For any business selling directly, GST registration only becomes mandatory above ₹40 lakh turnover for goods or ₹20 lakh for services (lower in special category states). None of that applies once you sell through an e-commerce operator — Section 24(ix) overrides the threshold entirely. A seller doing a few thousand rupees a month through a marketplace still needs a GSTIN before listing a single product.
How TCS Actually Works
| Step | What Happens |
|---|---|
| 1. Sale happens | Customer pays the platform for your product/service |
| 2. TCS deducted | Platform deducts 0.5% of net taxable value before settling your payout |
| 3. Platform files GSTR-8 | By the 10th of the following month, with seller-wise TCS detail |
| 4. TCS reflects in your GSTR-2B | Auto-populated from the platform's GSTR-8 |
| 5. You claim the credit | In GSTR-3B, against your output tax liability for that period |
TCS Is Not an Extra Cost — If You Track It
The 0.5% deducted by the platform isn't a fee you're paying to the government on top of your GST — it's collected in advance and credited straight back to you against your actual tax bill. The only way it becomes a real cost is if you forget to reconcile and claim it — which happens more often than sellers expect, especially across multiple marketplaces with different settlement cycles.
Composition Scheme Sellers — Not Eligible
Section 10(2)(d) specifically excludes anyone supplying goods through an e-commerce operator that's required to collect TCS from the composition scheme. If your business is currently under composition and you want to start selling on a marketplace, you'll need to formally opt out and move to regular GST first — you cannot do both at once. See our composition scheme guide for the opt-out process.
Monthly Reconciliation — The Habit That Protects Your Cash
- Match your platform settlement reports against your own sales records
- Check that TCS shown in GSTR-2B matches what the platform actually deducted
- Claim the full eligible TCS credit in GSTR-3B every month, not occasionally
- Flag and follow up on mismatches with the platform's seller support promptly, before they compound across months
GST Compliance for Online Sellers
Rajput Lalit & Associates handles GST registration, monthly return filing and TCS reconciliation for e-commerce sellers across India. Book a free consultation or see our GST Registration service.
Frequently Asked Questions
Do I need GST registration to sell on Amazon, Flipkart or Meesho?
Yes — compulsorily, regardless of your turnover. Section 24(ix) of the CGST Act specifically requires anyone supplying goods or services through an e-commerce operator to register for GST, overriding the usual ₹20 lakh/₹40 lakh threshold that applies to businesses selling directly. Even a seller doing ₹2 lakh a year through a marketplace must be registered.
What is TCS under GST and how much does the platform deduct?
Tax Collected at Source (Section 52) is 0.5% of the net taxable value of your sales, deducted by the e-commerce operator (Amazon, Flipkart, etc.) before paying you, and deposited with the government on your behalf. It's split as 0.25% CGST + 0.25% SGST for intra-state sales, or 0.5% IGST for inter-state sales. This was reduced from 1% with effect from 10 July 2024.
Is TCS an extra tax on top of my GST liability?
No — it's an advance collection, not an additional tax. The TCS deducted shows up in your GSTR-2B and electronic cash ledger, and you claim it as credit against your actual GST liability when filing GSTR-3B. Net effect: it's cash flow timing, not extra cost, as long as you claim the credit correctly.
Can a composition scheme dealer sell through an e-commerce platform?
No. Section 10(2)(d) specifically bars composition scheme taxpayers from making any supply of goods through an e-commerce operator required to collect TCS. If you're registered under composition and want to sell on a marketplace, you'd need to opt out of the composition scheme first and move to regular GST.
What happens if I don't claim my TCS credit?
It simply sits unused in your electronic cash ledger — it doesn't expire in the way ITC deadlines work, but it's still your money sitting idle instead of reducing what you pay in tax or being available for refund. Reconciling GSTR-8 (filed by the operator) against your own records every month is the practical way to make sure every rupee of TCS is claimed.
What if there's a mismatch between what the platform reports and what I actually sold?
Mismatches happen — returns, cancellations, and platform reporting errors are common. Since GSTR-8 auto-populates your GSTR-2B, an unreconciled mismatch can either understate your available credit or, worse, overstate your reported turnover in ways that don't match your own books. Monthly reconciliation between your sales records, the platform's settlement reports, and GSTR-8 is essential, not optional, for active marketplace sellers.
Disclaimer: This article is for general information based on the CGST Act, 2017 (Section 24, 52, 10(2)(d)) and current CBIC rates as of September 2026. TCS rates and e-commerce-specific rules have changed before and can change again — please verify the current position or consult a professional for your specific situation.