E-commerce invoicing, three moving parts
Every e-commerce sale in India involves at least three parties: the seller (you), the e-commerce operator (Amazon, Flipkart, Meesho, Shopify-hosted D2C with payment gateway), and the buyer. The tax treatment differs based on whether you sell through a marketplace or directly.
TCS under Section 52, marketplace sellers
Under Section 52 of the CGST Act, every e-commerce operator (marketplace) must collect 1% TCS on the net taxable value of supplies made through it. The operator collects this on behalf of the seller, reports it in GSTR-8, and credits it to the seller's electronic cash ledger. The seller can claim it as input against their own GST liability in GSTR-3B.
Practically: if a buyer pays ₹118 (₹100 product + ₹18 GST) on Amazon, Amazon remits ₹117 to the seller (the 1% TCS = ₹1 held back) and reports the ₹1 to GSTN. The seller claims ₹1 as credit in their GSTR-3B. The buyer sees the full ₹118 GST on their invoice.
TDS under Section 194-O, income tax side
In parallel, Section 194-O of the Income Tax Act, 1961 (effective 1 Oct 2020) requires the e-commerce operator to deduct 1% TDS on the gross amount of sales through the platform if the seller's annual sales through that operator exceed ₹5 lakh. This is separate from the GST TCS. The TDS is credited against the seller's income-tax liability when filing their annual return.
So marketplace sellers effectively have 2% held back: 1% GST TCS + 1% income TDS. Both are recoverable through the return process, but cash-flow-sensitive small sellers should plan for it.
D2C sellers, no operator, no TCS
If you sell from your own website with a direct payment gateway (no marketplace intermediating), there's no TCS/TDS under Sections 52/194-O, because there's no e-commerce operator collecting from you on behalf of the buyer. You're just a GST-registered seller issuing a tax invoice like any other regular supply. The buyer pays full price, you remit the GST to the government yourself.
What a marketplace invoice must show
- Seller's name, address, and GSTIN (your own, not the marketplace's)
- Invoice number unique within your FY
- Date of issue
- Buyer's name and address (from the marketplace order)
- Product description, HSN, quantity, unit price
- GST rate and amount split into CGST + SGST or IGST
- Shipping and discount lines
- Marketplace name and operator GSTIN, required in the footer
- TCS line (if required by operator) and TDS reference
- Return address and RTO policy, mandatory for COD orders on Amazon and Flipkart
Section 9(5), operator-side tax
For certain notified services (cab aggregators, food delivery, accommodation), the Section 9(5) CGST provision makes the operator itself liable for the GST, not the seller. Examples: Ola/Uber cab rides (operator pays 5% GST), Zomato/Swiggy food (operator pays 5% from Jan 2022), Airbnb-style accommodation. This reverses the normal flow, the seller issues a bill-of-supply, not a tax invoice, because they aren't the person charging the GST.
For regular product e-commerce (Amazon/Flipkart/Meesho for goods), Section 9(5) does not apply, the seller charges the GST, the operator collects TCS on top.
Common mistakes
- Mixing up TCS (GST, 1%, cash ledger credit) with TDS (income tax, 1%, creditable against next year's tax).
- Using the marketplace's GSTIN on the invoice instead of your own. Audit flag.
- Forgetting the return address for COD orders, Amazon and Flipkart can suspend the listing.
- Section 9(5) applies to your category, e.g. hotel aggregator, but you still issue a tax invoice. It should be a bill of supply.