What is the difference between TDS and TCS under GST?

TDS (Tax Deducted at Source) is deducted by certain buyers like government departments and PSUs from payments to suppliers when the contract value exceeds Rs 2.5 lakh. The rate is 2 percent (1% CGST plus 1% SGST or 2% IGST). TCS (Tax Collected at Source) is collected by e-commerce operators like Amazon and Flipkart from seller payouts at 1 percent (0.5% CGST plus 0.5% SGST or 1% IGST) on the net value of taxable supplies. TDS is filed through GSTR-7 by the deductor. TCS is filed through GSTR-8 by the e-commerce operator. Both credits appear in the supplier or seller GSTR-2B and can be claimed in GSTR-3B.

What is the TDS rate under GST?

The TDS rate under GST is 2 percent of the payment value excluding GST. This is split as 1 percent CGST plus 1 percent SGST for intra-state supplies, or 2 percent IGST for inter-state supplies. TDS applies only when the total contract value exceeds Rs 2.5 lakh and the buyer is a government department, PSU, local authority, or other notified person under Section 51 of the CGST Act. The deduction is made at the time of payment to the supplier, not at the time of invoice.

What is the TCS rate under GST for e-commerce?

The TCS rate under GST is 1 percent of the net value of taxable supplies made through the e-commerce platform. This is split as 0.5 percent CGST plus 0.5 percent SGST for intra-state supplies, or 1 percent IGST for inter-state supplies. There is no minimum threshold — TCS applies on all taxable supplies regardless of value. The net value is calculated as total taxable supplies minus returns for the month. The e-commerce operator deducts TCS from the seller payout before disbursement.

Who is required to deduct TDS under GST?

TDS under GST must be deducted by the following categories of buyers: central government departments and establishments, state government departments and establishments, local authorities like municipal corporations and panchayats, government agencies, public sector undertakings, societies registered under the Societies Registration Act, and autonomous bodies created by the central or state government. These entities must deduct TDS when making payments exceeding Rs 2.5 lakh for a single contract to any registered supplier of taxable goods or services.

How do I claim TDS or TCS credit in GST?

TDS and TCS credits automatically appear in your electronic cash ledger on the GST portal once the deductor files GSTR-7 or the e-commerce operator files GSTR-8. You can verify these amounts in your GSTR-2B auto-populated statement. When filing GSTR-3B, the credit from your cash ledger can be used to offset your output tax liability in Table 6. If the TDS or TCS credit exceeds your tax liability for the month, the excess balance remains in your electronic cash ledger and carries forward. You can also apply for a refund of excess balance.

Does TCS apply if I sell on my own Shopify store?

No, TCS under GST does not apply if you sell exclusively through your own website like a Shopify store. TCS under Section 52 of the CGST Act applies only to supplies made through e-commerce operators who own, operate, or manage the platform. When you sell on your own Shopify store, you are the operator and seller — there is no separate e-commerce operator to collect TCS. You collect GST directly from customers and pay it through GSTR-3B. TCS only kicks in when you sell through third-party marketplaces like Amazon, Flipkart, or Meesho.

What happens if TDS is not deducted when required?

If a person required to deduct TDS under GST fails to do so, they must pay the undeducted amount plus interest at 18 percent per annum from the date the TDS should have been deducted to the date of actual payment. Additionally, late filing of GSTR-7 attracts a late fee of Rs 50 per day up to Rs 10,000 per return. The supplier also faces consequences because the TDS credit does not appear in their GSTR-2B, meaning they cannot claim it. If you are a government contractor and notice TDS was not deducted, inform the buying department to ensure compliance and protect your credit entitlement.

ITC & Compliance

TDS vs TCS in GST 2026: Key Differences, Rates, and Who Must Comply

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.

Himanshu23 March 2026 · 6 min read · updated 6 September 2026

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Key takeaways

TDS under Section 51 is deducted at 2% by government buyers on contracts above Rs 2.5 lakh; TCS under Section 52 is 1% collected by marketplaces.
TCS has no threshold and applies to net taxable supplies (sales minus returns) on Amazon, Flipkart or Meesho, not on your own Shopify store.
Deductors file GSTR-7 and operators file GSTR-8 by the 10th; both credits land in your electronic cash ledger via GSTR-2B.
Late GSTR-7 or GSTR-8 costs Rs 50 per day up to Rs 10,000, and undeducted TDS attracts 18% interest.

What Are TDS and TCS Under GST?

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.

TDS vs TCS: Side-by-Side Comparison

The key differences that matter for compliance

	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: Who Must Deduct and When

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 Under GST: How E-Commerce Operators Collect It

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.

Filing Requirements: GSTR-7 vs GSTR-8

GSTR-7 (TDS Return)

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.

GSTR-8 (TCS Return)

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.

GSTR-7A (TDS Certificate)

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.

GSTR-2B (Auto-Populated)

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.

Impact on GSTR-3B

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.

Penalty for Non-Filing

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.

Practical Scenarios: When You Encounter TDS and TCS

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.

Track TDS and TCS Credits Automatically

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.

Frequently asked questions

What is the difference between TDS and TCS under GST?: TDS (Tax Deducted at Source) is deducted by certain buyers like government departments and PSUs from payments to suppliers when the contract value exceeds Rs 2.5 lakh. The rate is 2 percent (1% CGST plus 1% SGST or 2% IGST). TCS (Tax Collected at Source) is collected by e-commerce operators like Amazon and Flipkart from seller payouts at 1 percent (0.5% CGST plus 0.5% SGST or 1% IGST) on the net value of taxable supplies. TDS is filed through GSTR-7 by the deductor. TCS is filed through GSTR-8 by the e-commerce operator. Both credits appear in the supplier or seller GSTR-2B and can be claimed in GSTR-3B.
What is the TDS rate under GST?: The TDS rate under GST is 2 percent of the payment value excluding GST. This is split as 1 percent CGST plus 1 percent SGST for intra-state supplies, or 2 percent IGST for inter-state supplies. TDS applies only when the total contract value exceeds Rs 2.5 lakh and the buyer is a government department, PSU, local authority, or other notified person under Section 51 of the CGST Act. The deduction is made at the time of payment to the supplier, not at the time of invoice.
What is the TCS rate under GST for e-commerce?: The TCS rate under GST is 1 percent of the net value of taxable supplies made through the e-commerce platform. This is split as 0.5 percent CGST plus 0.5 percent SGST for intra-state supplies, or 1 percent IGST for inter-state supplies. There is no minimum threshold — TCS applies on all taxable supplies regardless of value. The net value is calculated as total taxable supplies minus returns for the month. The e-commerce operator deducts TCS from the seller payout before disbursement.
Who is required to deduct TDS under GST?: TDS under GST must be deducted by the following categories of buyers: central government departments and establishments, state government departments and establishments, local authorities like municipal corporations and panchayats, government agencies, public sector undertakings, societies registered under the Societies Registration Act, and autonomous bodies created by the central or state government. These entities must deduct TDS when making payments exceeding Rs 2.5 lakh for a single contract to any registered supplier of taxable goods or services.
How do I claim TDS or TCS credit in GST?: TDS and TCS credits automatically appear in your electronic cash ledger on the GST portal once the deductor files GSTR-7 or the e-commerce operator files GSTR-8. You can verify these amounts in your GSTR-2B auto-populated statement. When filing GSTR-3B, the credit from your cash ledger can be used to offset your output tax liability in Table 6. If the TDS or TCS credit exceeds your tax liability for the month, the excess balance remains in your electronic cash ledger and carries forward. You can also apply for a refund of excess balance.
Does TCS apply if I sell on my own Shopify store?: No, TCS under GST does not apply if you sell exclusively through your own website like a Shopify store. TCS under Section 52 of the CGST Act applies only to supplies made through e-commerce operators who own, operate, or manage the platform. When you sell on your own Shopify store, you are the operator and seller — there is no separate e-commerce operator to collect TCS. You collect GST directly from customers and pay it through GSTR-3B. TCS only kicks in when you sell through third-party marketplaces like Amazon, Flipkart, or Meesho.
What happens if TDS is not deducted when required?: If a person required to deduct TDS under GST fails to do so, they must pay the undeducted amount plus interest at 18 percent per annum from the date the TDS should have been deducted to the date of actual payment. Additionally, late filing of GSTR-7 attracts a late fee of Rs 50 per day up to Rs 10,000 per return. The supplier also faces consequences because the TDS credit does not appear in their GSTR-2B, meaning they cannot claim it. If you are a government contractor and notice TDS was not deducted, inform the buying department to ensure compliance and protect your credit entitlement.