As India’s digital commerce ecosystem scales new heights, the tax authorities have tightened oversight—especially on platforms like Amazon, Flipkart, Swiggy, and Ola. One powerful (and often under-discussed) tool in this effort is GST-TDS under Section 51 of the CGST Act.
But what does this mean for you—whether you’re a platform, seller, or tax professional?
Let’s decode it in simple terms.
What is GST-TDS in E-Commerce?
Under Section 51, certain notified entities—like government departments, local authorities, and e-commerce platforms—are required to deduct tax at source (TDS) when making payments to suppliers.
This TDS is not the same as income tax TDS. This is GST-TDS, deducted at 1% (0.5% CGST + 0.5% SGST) or 1% IGST, depending on whether the supply is intra-state or inter-state.
Why It Matters in E-Commerce
If you’re an e-commerce platform facilitating taxable supplies on behalf of sellers, you’re legally obligated to:
- Deduct GST-TDS before making supplier payouts
- Deposit it with the government by the 10th of the next month
- File GSTR-7 with full details
- Issue TDS certificate in Form GSTR-7A to suppliers
Failure to comply? You risk interest, penalties, and even a bar on credit utilization by the supplier.
What Happens to the Seller?
The TDS deducted is not lost money—it gets reflected in the seller’s electronic cash ledger, which they can use to pay their output GST liability.
But if you’re a seller relying heavily on e-commerce, you must:
- Track TDS entries in your portal
- Match with GSTR-7A issued by the platform
- Ensure correct GSTIN linkage (or your cash ledger won’t reflect it)
A Quick Illustration
Let’s say:
- You supply ₹1,00,000 worth of goods via Flipkart
- GST is 18%, so total invoice = ₹1,18,000
- Flipkart deducts ₹1,000 as TDS (1% of ₹1,00,000)
- It deposits this with the government under your GSTIN
- You receive ₹1,17,000
- ₹1,000 is available in your cash ledger to offset your tax dues
Simple—but only when systems sync.
Pro Tips for Platforms & Sellers
For E-commerce Operators:
✔ Automate TDS deduction & reconciliation
✔ File GSTR-7 on time
✔ Issue GSTR-7A regularly to sellers
For Sellers:
✔ Monitor cash ledger for credits
✔ Ensure GSTIN details on platforms are correct
✔ Raise a red flag if TDS isn’t reflecting
GST-TDS on E-Commerce– Conclusion
GST-TDS is not just a procedural requirement—it’s a compliance checkpoint in India’s digital tax framework. For e-commerce players and sellers alike, getting it right means fewer notices, better cash flow, and cleaner books. Get in touch with Pitchers Global today!