Last reviewed: 25 September 2026. If you sell on Amazon, Flipkart, Meesho or Myntra, two separate deductions hit every payout before it reaches your bank account — income-tax TDS on e-commerce sales (section 393(1) of the Income-tax Act, 2025, known until March 2026 as Section 194-O) and GST TCS under Section 52. Sellers routinely mix the two up, miss the credit in their returns, or wrongly assume a turnover threshold protects them. This guide separates the two, works through both with numbers, and gives you a monthly reconciliation checklist. Section 194-O of the 1961 Act still governs amounts credited or paid up to 31 March 2026 (FY 2025-26 and earlier), so both references appear below.
Who this applies to
Both provisions apply to any person selling goods or providing services through an "e-commerce operator" — a marketplace that owns, operates or manages a digital platform for facilitating supply. Amazon, Flipkart, Meesho, Myntra, Zomato and Swiggy are all e-commerce operators for this purpose. It does not matter whether you are a sole proprietor, a partnership, an LLP or a private limited company — the GST TCS obligation applies uniformly; only the income-tax TDS exemption carries an entity-type condition, covered below.
E-commerce TDS: how the income-tax deduction actually works
Under section 393(1) (Table S.No. 8(v)) of the Income-tax Act, 2025 (old section 194-O, which governed payments up to 31 March 2026), the e-commerce operator must deduct TDS at 0.1% of the gross amount of sale of goods, provision of services, or both, facilitated through its platform, at the time of credit of the amount to the seller's account or at the time of payment, whichever occurs earlier — including where the platform itself makes the payment directly to the customer's account, in which case the amount is deemed credited to the seller and TDS still applies.
The rate was reduced from 1% to 0.1% by the Finance (No. 2) Act, 2024, with effect from 1 October 2024, and continues at 0.1% for FY 2026-27. A resident individual or HUF seller is exempt from this TDS on the first ₹5 lakh of gross sales credited or paid in the financial year, provided PAN or Aadhaar has been furnished to the operator; once cumulative sales cross ₹5 lakh, the operator deducts 0.1% on amounts credited or paid thereafter in that year. Companies, firms and LLPs get no such threshold — TDS applies from the first rupee. Where a seller has not furnished PAN or Aadhaar at all, section 397(2) (old 206AA) overrides the concessional rate and the operator must deduct at 5% from the first rupee, which is a real cash-flow hit worth avoiding by simply completing KYC on the seller dashboard.
Income-tax Act, 2025 – what the renumbering means
The Income-tax Act, 2025 took effect on 1 April 2026 (tax year 2026-27) and carries the TDS provisions into a single rate table in section 393. E-commerce TDS is section 393(1), Table S.No. 8(v). The transition rule is simple: the section in force when the amount is credited or paid, whichever is earlier, decides the reference. Credits or payments up to 31 March 2026 fall under Section 194-O; those from 1 April 2026 fall under section 393(1). The operator now reports the deduction in the quarterly TDS statement in Form No. 140 (earlier Form 26Q) and issues the TDS certificate in Form No. 131 (earlier Form 16A) under section 395(4). Older software menus may still say "194-O"; the obligation is the same, but your records for FY 2026-27 should cite section 393.
Section 52: how GST TCS works alongside it
Separately, under Section 52 of the CGST Act, every e-commerce operator must collect tax at source at 0.5% of the net value of taxable supplies made through it by other suppliers, where the operator collects the consideration. Net value excludes supplies returned during the month. The rate is split 0.25% CGST + 0.25% SGST for intra-state supplies, or 0.5% IGST for inter-state supplies — this rate has applied since 10 July 2024 (down from 1%, per CBIC Notification 15/2024-Central Tax) and is unchanged for FY 2026-27.
The operator files GSTR-8 by the 10th of the month following the month of collection, reporting seller-wise supplies and TCS collected. The amount collected is credited to the seller's electronic cash ledger on GSTR-8 being filed, from where it can be used to discharge output GST liability or claimed as a refund if there is nothing to set it against.
GST registration for marketplace sellers
Selling through an e-commerce operator that is required to collect TCS makes GST registration compulsory under Section 24(ix), irrespective of the seller's aggregate turnover — the usual ₹20 lakh/₹40 lakh threshold does not help here. The one narrow relief, under Notification 34/2023-Central Tax (effective 1 October 2023), lets a supplier of goods only, selling exclusively intra-state, with turnover below the normal threshold, sell via e-commerce without full GST registration provided they obtain a GST enrolment number. It does not extend to services or to any inter-state sale. Composition scheme dealers were similarly permitted, from the same date, to sell goods (not services) intra-state through e-commerce operators, under a relaxation to Section 10(2)(d)/10(2A)(c); composition dealers remain barred from inter-state supply and from selling services through a marketplace.
Sellers exporting through cross-border programmes such as Amazon Global Selling face a different set of questions: exports are zero-rated under GST, usually under an LUT, and the foreign marketplace payouts must be realised and reported under FEMA. If you sell abroad through your own overseas entity, our foreign subsidiary accounting and FEMA service covers the Indian parent's side; for the LUT and refunds, see GST for exporters.
Worked example 1 – e-commerce TDS for an individual seller
Ms. Priya, a resident individual, sells apparel exclusively through a marketplace and has furnished her PAN. In FY 2026-27 the platform credits her gross sale value of ₹7,50,000.
| Particulars | Amount (₹) |
|---|---|
| Gross sales credited during the year | 7,50,000 |
| Exempt slab (individual/HUF with PAN on file) | 5,00,000 |
| Amount subject to TDS under s.393(1) (old 194-O) | 2,50,000 |
| TDS @ 0.1% | 250 |
| Net credited to Priya after TDS (before GST TCS) | 7,49,750 |
Had Priya been a private limited company instead, TDS at 0.1% would apply on the full ₹7,50,000 (₹750), since the exempt slab does not apply to corporate or firm/LLP sellers.
Worked example 2 – GST TCS under Section 52
Priya is also GST-registered (registration was compulsory the moment she started selling via the marketplace). In one month, the net taxable value of her intra-state supplies through the platform is ₹1,20,000 (GST charged separately on invoices).
| Particulars | Amount (₹) |
|---|---|
| Net taxable value of supplies for the month | 1,20,000 |
| TCS @ 0.5% (0.25% CGST + 0.25% SGST) | 600 |
| Credited to Priya's electronic cash ledger on GSTR-8 filing | 600 |
Priya sees this ₹600 in her electronic cash ledger once the operator files GSTR-8 (due the 10th of the following month) and can use it to pay output GST liability declared in her GSTR-3B, or claim a refund if her ledger balance is not needed.
Common mistakes sellers make
| Mistake | Why it costs you |
|---|---|
| Assuming the ₹5 lakh TDS exemption applies to a private limited company or LLP | It doesn't — TDS is deducted from the first rupee for non-individual/HUF sellers |
| Not furnishing PAN/Aadhaar to the platform | TDS jumps to 5% under section 397(2) (old 206AA) instead of 0.1% |
| Treating TDS credit (Form 26AS/AIS) and TCS credit (electronic cash ledger) as the same thing | They sit in different systems and must be reconciled separately every month |
| Skipping GST registration because "turnover is below ₹40 lakh" | Registration is compulsory for e-commerce sellers under Sec 24(ix), with only a narrow intra-state-goods carve-out |
| Not matching monthly GSTR-8 data with your own sales register | Mismatches delay the cash-ledger credit and complicate GSTR-9 annual reconciliation |
Monthly compliance checklist
- Confirm PAN/Aadhaar is on file with every marketplace you sell on — check the seller dashboard, not just your onboarding email.
- Download the quarterly TDS certificate in Form No. 131 (earlier Form 16A) and the platform's TCS statement from each marketplace.
- Reconcile the e-commerce TDS against Form 26AS/AIS before filing advance tax or your return.
- Reconcile Section 52 TCS against your electronic cash ledger on the GST portal after each GSTR-8 filing window closes.
- Verify GST registration covers every state you hold stock in (for warehouse/fulfilment-centre based models) or confirm the intra-state-only enrolment route if you qualify for it.
- Claim the e-commerce TDS credit against business income while filing your ITR; claim the Section 52 TCS credit through GSTR-3B, not through the income-tax return.
Our TDS Rate Finder tool is a quick way to cross-check the deduction rate applicable to any payment, including e-commerce transactions, before you dispute a platform's deduction. Sellers who also receive a TDS short-deduction notice from their own vendors or contractors may find our guide to TDS default notices, Section 201(1A) interest and Form 26A useful background on how the department reconciles these mismatches.
Frequently asked questions
I sell only ₹3 lakh a year on Meesho. Does Section 194-O still apply to me?
The e-commerce TDS provision (now section 393(1) of the Income-tax Act, 2025, old 194-O) applies to the transaction, but if you are a resident individual or HUF and have furnished PAN/Aadhaar to the platform, no TDS is deducted because your gross sales stay under the ₹5 lakh exempt slab for the year. If you are a firm, LLP or company, the exemption does not apply and 0.1% TDS is deducted regardless of the amount.
What happens if I never gave the platform my PAN?
The higher-rate rule for missing PAN, section 397(2) of the Income-tax Act, 2025 (old 206AA), overrides the concessional 0.1% rate, and the operator must deduct TDS at 5% from the first rupee of gross sales. Updating your PAN on the seller dashboard going forward stops the higher deduction on future payouts; it does not refund what was already deducted at 5%, though you can still claim that TDS as credit in your return.
Are Section 194-O TDS and GST TCS the same deduction, or do both apply?
Both apply, independently, to the same underlying sale. The e-commerce TDS is an income-tax deduction reflected in Form 26AS/AIS and adjusted against your income-tax liability. Section 52 TCS is a GST collection reflected in your electronic cash ledger and adjusted against your GST liability. Track and reconcile them separately.
My turnover is below ₹40 lakh — do I still need GST registration to sell on Amazon or Flipkart?
Generally yes. Section 24(ix) makes GST registration compulsory for suppliers selling through an e-commerce operator that collects TCS, regardless of turnover. The only relief is for a goods-only supplier selling exclusively intra-state below the normal threshold, who may sell using a GST enrolment number instead of full registration, under Notification 34/2023-Central Tax.
Where do I actually see the GST TCS that has been collected on my sales?
It appears in your electronic cash ledger on the GST portal once the e-commerce operator files GSTR-8 for that month (due the 10th of the following month). It does not show up in GSTR-2A/2B, since it is a cash-ledger credit, not an input tax credit.
Can a composition scheme dealer sell through Amazon or Flipkart?
Yes, for goods only, and only for intra-state supply, following the relaxation effective 1 October 2023. A composition dealer cannot use e-commerce operators to make inter-state supplies or to sell services.
Has Section 194-O changed under the Income-tax Act, 2025?
It has been renumbered. For amounts credited or paid from 1 April 2026, e-commerce TDS is deducted under section 393(1), Table S.No. 8(v), of the Income-tax Act, 2025 (old section 194-O). Credits or payments up to 31 March 2026 remain under section 194-O of the 1961 Act. The operator reports the deduction in the quarterly statement in Form No. 140 (earlier Form 26Q) and issues the TDS certificate in Form No. 131 (earlier Form 16A) under section 395(4).
We help e-commerce sellers get GST registration in place correctly, reconcile e-commerce TDS and Section 52 TCS every month, and file returns that claim both credits accurately.
GST Registration & Filing Income Tax Filing Talk to usThis article is for general guidance on section 393(1) of the Income-tax Act, 2025 (for amounts credited or paid from 1 April 2026), Section 194-O of the Income-tax Act, 1961 (for amounts up to 31 March 2026) and Section 52 of the CGST Act, 2017, based on the law and notifications in force as of the date above. Rates, thresholds and forms are subject to change by subsequent notification; please confirm your specific position with a qualified professional before making a compliance decision.