TDS vs TCS for Marketplace Sellers: What’s the Difference?

TDS and TCS show up on the same settlement report, get confused constantly, and are actually governed by completely different laws.

TCS (Tax Collected at Source) is a GST mechanism under Section 52 — the marketplace collects 1% of your taxable sales and deposits it against your GST liability. You claim it back as credit in your GST returns.

TDS (Tax Deducted at Source) is an income-tax mechanism under Section 194-O — the marketplace deducts a percentage (commonly 0.1% to 1% depending on thresholds and your PAN/Aadhaar linkage status) from your gross sales as advance income tax. This gets credited against your income tax liability, not your GST liability, and shows up in Form 26AS rather than GSTR-2B.

Flipkart, in particular, deducts both TDS and TCS on the same settlement, which means a single settlement report can carry two tax deductions that need to reconcile against two entirely different government systems — GSTR-2B for TCS, Form 26AS for TDS. Mixing them up in your books doesn’t just cause a bookkeeping error; it can mean under-claiming credit you’re owed on one side or the other.

The safest habit is treating TDS and TCS as two separate line items from the moment you reconcile a settlement, never as one combined "tax deducted" figure — which is why reconciliation tools worth using break them out individually rather than netting them into your final settlement number.