# Tax Collected at Source (TCS) under GST [Section 52]
## Why this provision exists
When goods/services are sold through an E-Commerce Operator (ECO) like Amazon or Flipkart, the actual supplier (vendor) is often a small unorganised seller. To ensure tax compliance and traceability, the law makes the ECO responsible for collecting a small portion of tax (TCS) from the consideration payable to the supplier, and depositing it with the Government. The supplier can later claim this amount as credit in his cash ledger.
## How the mechanism works (flow)
1. Buyer places an order on the ECO platform and pays the ECO (Sale value + GST).
2. ECO retains the TCS portion (0.5% of net taxable supplies) and remits the balance to the supplier.
3. ECO deposits TCS with the Government.
4. Supplier claims the TCS in his electronic cash ledger.
## Who is liable to collect TCS?
Every E-Commerce Operator (ECO) who is NOT acting as an agent of the supplier.
## Rate of TCS
- 0.25% CGST + 0.25% SGST (intra-state) OR
- 0.5% IGST (inter-state)
## Base for TCS – "Net value of taxable supplies" (supplier-wise, monthly)
> Net value of taxable supplies = Aggregate value of taxable supplies (other than services u/s 9(5)) made during the month – Taxable supplies returned to the supplier during the month
- Computed supplier-wise and month-wise.
- If the result is negative, ignore it (do not carry forward).
## Timing – When to collect
TCS must be collected at the time supply is made, irrespective of when payment is received.
Example: Supply made in May; payment received in July → TCS collected in May.
## Cases where TCS is NOT to be collected
1. ECO supplies its own products through its own website (e.g., Titan selling watches on titan.com).
2. ECO platform is used only as a listing service and payment is collected directly by the vendor.
3. Supply of services notified u/s 9(5) (ECO itself pays tax on these).
4. Exempt supplies.
5. Supplies where recipient pays under RCM.
6. Supply made by an unregistered person (note: unregistered in the sense of not required to register).
## Payment of tax liability by ECO – three buckets
| Type of Liability | Mode of Payment |
|---|---|
| Tax on notified services u/s 9(5) | Cash only (cannot use ITC) |
| TCS collected | Cash only |
| Tax on ECO's own services (commission, platform fees) | Cash or ITC (normal liability) |
## Compliance Timeline
- Deposit of TCS: by the 10th of the succeeding month.
- GSTR-8 (monthly statement): by 10th of the succeeding month.
- Annual Statement: by 31st December of the year following the FY.
## Registration impact
- ECO required to collect TCS → Mandatory registration (no turnover threshold).
- Proper officer must grant registration within 3 working days.