TDS and TCS under GST are two different deduction mechanisms. TDS is deducted by the buyer. TCS is collected by e-commerce operators. Here is a clear comparison with rates, applicability, and filing requirements.
TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) under GST are often confused because they sound similar. But they work in completely different ways, apply to different parties, and serve different purposes. Understanding the difference is essential for compliance — getting it wrong means penalties, interest, and blocked input tax credit.
TDS under GST (Section 51): When certain notified buyers (government departments, PSUs, local authorities, and some registered persons) make payments above Rs 2.5 lakh to suppliers, they must deduct 2% GST (1% CGST + 1% SGST for intra-state, or 2% IGST for inter-state) from the payment. The deducted amount is deposited with the government and the supplier claims it as credit.
TCS under GST (Section 52): When e-commerce operators like Amazon, Flipkart, or Meesho facilitate sales, they collect 1% (0.5% CGST + 0.5% SGST, or 1% IGST) from the seller's payout. This is deposited with the government and the seller claims it as credit in GSTR-3B.
We built the free TDS calculator to help you compute TDS amounts on any payment. For TCS tracking, myBillPlease records your e-commerce TCS in the GSTR-3B reconciliation module — matching what operators deducted against your portal data.
The key differences that matter for compliance
| Feature | TDS (Section 51) | TCS (Section 52) |
|---|---|---|
| Full form | Tax Deducted at Source | Tax Collected at Source |
| Who deducts/collects | Buyer (government, PSU, notified persons) | E-commerce operator (Amazon, Flipkart, etc.) |
| Rate | 2% (1% CGST + 1% SGST or 2% IGST) | 1% (0.5% CGST + 0.5% SGST or 1% IGST) |
| Threshold | Contract value > Rs 2.5 lakh | No threshold — applies on all taxable supplies |
| On what amount | Payment to supplier (excluding GST) | Net value of taxable supplies (sales minus returns) |
| Return to file | GSTR-7 by the deductor | GSTR-8 by the operator |
| Due date | 10th of next month | 10th of next month |
| Supplier claims credit in | GSTR-3B — electronic cash ledger | GSTR-3B — electronic cash ledger |
| Appears in supplier's | GSTR-2B auto-populated | GSTR-2B auto-populated |
| Certificate | TDS certificate in GSTR-7A | TCS details in GSTR-2B |
TDS under GST applies only to specific categories of buyers making payments above Rs 2.5 lakh for a single contract. The deductors include:
Government departments: Central and state government departments making payments for goods or services. This includes all ministries, departments, and offices.
Public sector undertakings: Government-owned companies and corporations like ONGC, BHEL, Indian Railways, etc.
Local authorities: Municipal corporations, panchayats, and other local governing bodies.
Notified persons: Certain registered persons notified by the government — including societies registered under the Societies Registration Act and autonomous bodies established by government.
When to deduct: TDS is deducted at the time of payment to the supplier, not at the time of invoice. If the payment amount (excluding GST) exceeds Rs 2.5 lakh for a single contract, deduct 2% GST from the payment.
Example: A government department pays a contractor Rs 5 lakh (excluding GST) for office renovation. TDS = 2% of Rs 5 lakh = Rs 10,000 (Rs 5,000 CGST + Rs 5,000 SGST for intra-state). The contractor receives Rs 4,90,000 and claims the Rs 10,000 as credit in their GSTR-3B.
myBillPlease generates GSTR-7 (TDS return) reports for businesses that deduct TDS. The report tracks all deductions with supplier GSTIN, invoice details, and tax amounts — ready for portal filing.
TCS affects every seller on e-commerce platforms. Unlike TDS which has a threshold, TCS applies on ALL taxable supplies facilitated through the platform — no minimum amount.
How it works: When you sell Rs 10,000 worth of goods on Amazon, Amazon collects 1% TCS = Rs 100 from the net value. Your payout is Rs 9,900 (before Amazon's commission and other deductions). The Rs 100 is deposited with the government by Amazon and appears in your GSTR-2B.
Net value calculation: TCS is calculated on net taxable value = Total sales minus returns. If you sold Rs 1 lakh and had Rs 10,000 in returns, TCS applies on Rs 90,000 = Rs 900.
Claiming TCS credit: The TCS amount appears in your electronic cash ledger on the GST portal. When filing GSTR-3B, you can use this credit to offset your tax liability. If TCS exceeds your liability for the month, the balance carries forward or you can claim a refund.
Cash flow impact: For high-volume sellers doing Rs 50 lakh monthly on marketplaces, TCS deduction is Rs 50,000 per month. This is essentially an interest-free loan to the government that you recover when filing returns. Factor this into your working capital planning. Read our complete e-commerce GST guide for more details.
Different returns for different mechanisms
Filed by the person who deducted TDS. Contains details of all suppliers from whom TDS was deducted — GSTIN, invoice details, TDS amount, and payment date. Due by the 10th of the following month.
Filed by the e-commerce operator. Contains details of all sellers and the TCS collected from each. Amazon, Flipkart, etc. file this — sellers don't file GSTR-8. Due by the 10th of the following month.
Auto-generated certificate available to the supplier when the deductor files GSTR-7. This proves TDS was deducted and deposited. The supplier uses it for reconciliation with their GSTR-2B.
Both TDS and TCS amounts appear in the supplier/seller's GSTR-2B statement. Verify these amounts match your records before claiming credit in GSTR-3B. Mismatches indicate filing errors by the deductor/operator.
TDS and TCS credits flow into your electronic cash ledger and can be used to offset output tax in GSTR-3B Table 6. This reduces your actual cash payment to the government.
Late filing of GSTR-7 or GSTR-8 attracts Rs 50 per day (Rs 25 CGST + Rs 25 SGST) up to Rs 10,000 per return. Non-deduction of TDS when required attracts interest at 18% per annum on the undeducted amount.
Scenario 1 — You are a contractor supplying to government: You supply Rs 10 lakh worth of IT services to a state government department. They deduct 2% TDS = Rs 20,000 and pay you Rs 9,80,000 (plus GST separately). You claim the Rs 20,000 in your next GSTR-3B. myBillPlease tracks this in your TDS receivable report.
Scenario 2 — You sell on Amazon: You sell Rs 5 lakh worth of goods on Amazon in a month with Rs 20,000 in returns. Net value = Rs 4,80,000. Amazon deducts 1% TCS = Rs 4,800. You claim this Rs 4,800 in GSTR-3B. Check your input tax credit calculation to see the combined effect of ITC + TCS credit.
Scenario 3 — You are BOTH a government supplier and Amazon seller: You get TDS deducted by government clients AND TCS collected by Amazon. Both credits appear in your GSTR-2B. Both offset your tax liability in GSTR-3B. Keep track of both separately for reconciliation.
Scenario 4 — You sell on your own Shopify store: No TCS applies because Shopify is not an e-commerce operator for GST purposes (you collect payment directly). You only encounter TDS if you supply to government entities. For most D2C Shopify sellers, neither TDS nor TCS applies. Use our TDS calculator to verify amounts.
Managing TDS and TCS manually is error-prone — deductions from multiple sources, monthly reconciliation with GSTR-2B, and credit claims in GSTR-3B. One missed entry means less credit claimed and higher tax paid.
myBillPlease tracks both TDS and TCS in your GST workflow. Record purchase invoices with TDS details, and the GSTR-7 report generates for TDS deductors. For TCS, the GSTR-2B reconciliation matches operator-reported TCS against your sales records. All credits flow into the GSTR-3B calculation automatically. Free plan includes basic tracking. Starter plan at Rs 799/month adds full reconciliation. See pricing for details.
myBillPlease matches your TDS/TCS records against portal data. Never miss a credit claim. Free plan available.
Get Started Free