TCS in GST: Applicability, Rates, Compliance & Filing Process
Tax Collected at Source (TCS) under GST refers to the tax that a seller collects from the buyer at the point of sale and deposits with the government. This system, introduced under the GST regime, is designed to enforce tax compliance and effectively track transactions. TCS is especially applicable to e-commerce operators who facilitate the sale of goods or services through their online platforms. Since its implementation on 1st October 2018, TCS has become a key part of the compliance requirements for such e-commerce operators. This article explores the applicability, rates, compliance procedures, and filing process involved in managing TCS under GST.
What is TCS in GST?
TCS in GST refers to the mechanism where specific categories of businesses - primarily e-commerce operators - are mandated to collect a percentage of the net value of taxable supplies made through their platform. Unlike regular sellers, these operators are not selling goods or services themselves but are facilitating sales for other vendors. Under this system, the operator collects TCS from the payment made to the supplier and remits it to the government. The supplier, in turn, can claim the TCS amount as credit in their electronic cash ledger, which can be used to offset GST liabilities. This system creates an audit trail for online transactions, helping tax authorities monitor digital sales and reduce tax evasion.
Applicability of TCS under GST
The applicability of TCS under GST primarily concerns e-commerce operators facilitating third-party sales. These operators are liable to collect tax when consideration is received on behalf of suppliers.
TCS is applicable when:
The e-commerce operator facilitates the supply of goods/services through its platform.
The supplier is registered under GST.
The consideration is collected by the operator.
TCS is not applicable in cases of:
Exempted goods or services.
Non-taxable supplies.
Imports and exports.
Supplies by unregistered sellers, except for notified services under Section 9(5):
Passenger transport via radio-taxi/motorcycle.
Accommodation services (hotels, lodges) by unregistered suppliers.
Housekeeping services (plumbers, carpenters) by unregistered suppliers
Who needs to deduct TCS under GST?
Under GST, TCS must be deducted by “e-commerce operators” who facilitate the supply of goods or services through their digital platforms and collect payment on behalf of suppliers. These operators must collect TCS from the net value of taxable supplies made by registered suppliers on their portal. It applies only when the operator is not acting as the actual supplier but as an intermediary.
When should the TCS under GST be deducted?
TCS under GST should be deducted by the e-commerce operator at the time of crediting the payment to the supplier’s account or at the time of making the payment, whichever is earlier. The deduction is based on the net value of taxable supplies made through the platform, excluding returns and taxes. This ensures timely tax collection and proper tracking of transactions under the GST framework.
What are the TCS Rates under GST?
As per the latest CGST Notification No. 15/2024 dated 10th July 2024, the applicable TCS rate has been revised to 0.5%, effective from 10th July 2024. Prior to this, a TCS rate of 1% was in force, as notified under Notification No. 52/2018 (CGST) and Notification No. 02/2018 (IGST).
For intra-state supplies, the revised 0.5% TCS is divided equally:
0.25% under CGST
0.25% under SGST
For inter-state supplies, the entire 0.5% TCS is collected under the IGST Act.
How to Deposit the Deducted TCS under GST?
E-commerce operators who collect Tax Collected at Source (TCS) under GST must deposit the collected amount to the government within the prescribed timeline.
Deposit the TCS amount through the GST portal using the appropriate challan.
Use the operator’s GSTIN while making the payment.
Ensure the payment is made electronically via internet banking, debit/credit card, NEFT, or RTGS.
Generate and keep the challan receipt as proof of payment.
Deposit must be made for every month in which TCS is collected.
Due Date to Deposit Deducted TCS
The TCS collected during a month must be deposited with the government by the 7th day of the following month. For example, TCS collected in April 2025 must be deposited by 7th May 2025.
How to File Returns for Deducted TCS under GST?
After depositing the TCS, e-commerce operators must file a monthly return to report the details of TCS collected and deposited.
File the return in Form GSTR-8 on the GST portal.
Log in to the GST portal and navigate to Services > Returns > Returns Dashboard.
Select the relevant financial year and month.
Click on “Prepare Online” under GSTR-8.
Enter details of supplies attracting TCS, amendments (if any), and the TCS amount deposited.
Submit the return and complete the filing process.
Due Date for TCS Return Filing
The due date for filing the GSTR-8 return is the 10th day of the month following the month in which TCS was collected. For example, for TCS collected in April 2025, the GSTR-8 return must be filed by 10th May 2025.
Penalties for TCS Non-Compliance under GST
E-commerce operators failing to comply with TCS (Tax Collected at Source) rules under GST face strict penalties. Below is a breakdown of consequences and key provisions:
Monetary Penalties:
Under Section 122(1B) of CGST Act: A penalty of ?1 lakh or 10% of the tax payable (whichever is higher) applies for:
Not collecting TCS from suppliers.
Delayed or incorrect deposit of TCS to the government.
Allowing Non-Compliant Suppliers: ECOs permitting unregistered persons or composition taxpayers to sell on their platform faces penalties of ?10,000 or more per violation.
Interest Charges: 18% annual interest on overdue TCS amounts, calculated from the due date until payment is made.
Prosecution: Severe cases (e.g., intentional evasion) may lead to imprisonment up to 5 years and additional fines.
Note: Penalty rate might be subject to change. Ideally, you should be compliant with the TCS provisions and avoid penalties. Contact IndiaFilings now to ease the process successfully.
Need to be TCS-Compliant? Get a Dedicated GST Accountant!
Need help staying TCS-compliant under GST? Let a dedicated GST accountant handle it for you! From accurate TCS calculations and timely GSTR-8 filing to hassle-free deposits on the GST portal, our experts ensure you never miss a deadline or face penalties. Whether you're an e-commerce operator or seller, we simplify your compliance process so you can focus on growing your business.
Get started today and stay 100% GST-compliant with confidence!