Every time Amazon, Flipkart, or Meesho disburses money into your bank account, you will notice two recurring statutory deduction lines:
- 10.1% TDS under Section 194-O of the Income Tax Act.
- 20.5% GST TCS under Section 52 of the Central Goods and Services Tax (CGST) Act.
To an uninitiated seller doing ₹10,00,000 in monthly sales, these deductions look tiny: ₹1,000 in TDS and ₹5,000 in TCS—a combined ₹6,000 a month.
Over a full financial year, that represents ₹72,000 in cold cash. For a seller doing ₹50 Lakhs a month, it is ₹3,60,000 of your working capital silently withheld at source.
Here is the dirty secret of Indian e-commerce accounting:
A massive percentage of small and medium sellers NEVER claim this money back.
Because many local tax consultants and accountants do not specialize in multi-channel marketplace reconciliations, this money sits permanently trapped in government portals—either forgotten in your GST Electronic Cash Ledger or unclaimed on your Income Tax portal.
Here is the definitive guide to how statutory withholding works in 2026, the recent rate change, and the exact step-by-step monthly SOP to turn those deductions back into usable liquid cash.
The Statutory Architecture: TDS 194-O vs GST TCS
Do not confuse these two deductions. They operate under completely different tax laws, flow into different portals, and are recovered through entirely different mechanisms:
| Statutory Parameter | Section 194-O (Income Tax TDS) | Section 52 (GST TCS) |
|---|---|---|
| Governing Law | Income Tax Act, 1961 | CGST / SGST Act, 2017 |
| Current Rate | 0.1% of Gross Sale Amount | 0.5% of Net Taxable Supplies (0.25% CGST + 0.25% SGST) |
| Recent Rate Revision | Unchanged | Reduced from 1.0% to 0.5% (Effective 1 Oct 2024) |
| Deducted By | Marketplace Operator (Amazon / Flipkart) | Marketplace Operator |
| Where It Reflects | Form 26AS & AIS / TIS on Income Tax Portal | GSTR-8 return on the GST Portal |
| How You Recover It | Offset against Advance Tax / Annual ITR Refund | Credited to GST Electronic Cash Ledger |
The Critical 1 Oct 2024 Rule Change: TCS Cut from 1% to 0.5%
Pursuant to Notification No. 15/2024 – Central Tax, the Central Board of Indirect Taxes and Customs (CBIC) officially slashed the GST TCS rate under Section 52 from 1.0% down to 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST on inter-state sales), effective 1 October 2024.
If your accounting software or third-party ERP still deducts a legacy 1.0% TCS buffer on post-October 2024 orders, your financial reporting is inaccurate. Ensure your systems reflect the verified 0.5% rate.
Step-by-Step SOP: How to Recover Your GST TCS Every Single Month
This is money you can use immediately to pay your regular monthly GST tax liability instead of withdrawing cash from your bank account. Follow this exact workflow between the 11th and 14th of every month:
Step 1: Download Marketplace TCS Reports
Log into each seller portal and download the monthly tax withholding summary:
- Amazon Seller Central: Go to Reports $\to$ Tax Document Library $\to$ Merchant Tax Reports $\to$ GST TCS Report.
- Flipkart Seller Hub: Go to Reports $\to$ Reports Center $\to$ Invoices & TCS $\to$ TCS Monthly Summary.
- Meesho Supplier Panel: Go to Payments $\to$ Tax Invoices $\to$ TCS Certificates.
Step 2: Log into the Official GST Portal
Navigate to gst.gov.in and log in with your GSTIN credentials.
Step 3: Open "TDS and TCS Credit Received"
- 1Go to Services $\to$ Returns $\to$ Returns Dashboard.
- 2Select the Financial Year and Return Filing Period (e.g., September 2026).
- 3Look for the tile titled TDS and TCS Credit Received (This return appears automatically after marketplaces file their monthly GSTR-8 by the 10th of the month).
- 4Click Prepare Online.
Step 4: Accept and File the Records
Inside the return:
- 1Click on the TCS Credit Received tab.
- 2You will see line items uploaded directly by Amazon Seller Services Pvt Ltd, Flipkart Internet Pvt Ltd, and Fashnear Technologies (Meesho), displaying gross sales, net returns, and the exact TCS collected.
- 3Select all records and click Accept.
- 4Click Compute Liabilities $\to$ Proceed to File, and verify using your EVC OTP or DSC.
Step 5: Cash Immediately Arrives in Your Electronic Cash Ledger
The moment you file the return, the entire 0.5% TCS amount is instantly credited into your GST Electronic Cash Ledger.
When filing your monthly GSTR-3B, you can use this cash balance to pay your output GST liability on sales. If you owed ₹45,000 in GST and have ₹8,000 in accepted TCS credit, you only transfer ₹37,000 from your bank account. That is ₹8,000 of real cash preserved.
Step-by-Step SOP: How to Reconcile and Claim Income Tax TDS (194-O)
Unlike GST TCS, which is recovered monthly, Income Tax TDS under Section 194-O is reconciled quarterly and claimed during your annual Income Tax Return (ITR):
- 1Verify Marketplace TAN Details: Marketplaces deposit your TDS quarterly using their corporate TAN (e.g., Amazon Seller Services uses TAN: BLRA08351B).
- 2Download Form 26AS & AIS: Log into the Income Tax e-Filing portal (incometax.gov.in). Open e-File $\to$ Income Tax Returns $\to$ View Form 26AS.
- 3Cross-Reference Section 194-O Entries: Check Part A2 (TDS on Sale of Goods through E-Commerce Operator). Match the gross transaction value against your Amazon and Flipkart Date Range Transaction Reports.
- 4Offset Against Advance Tax: If your business is liable for advance tax payments (due in June, September, December, and March), deduct your accumulated Section 194-O TDS credits from your tax liability to avoid interest penalties under Section 234B and 234C.
Reconcile your multi-channel marketplace withholding reports automatically with our free Tax Withholding Reconciler.