For an ordinary taxable sale made by a third-party seller through an online marketplace in India, the seller generally remains responsible for GST on the sale. The marketplace may separately collect and remit Section 52 tax collected at source (TCS) when the statutory conditions apply. That TCS is credited to the seller; it does not usually replace the seller’s GST liability. A key exception applies to services specifically notified under Section 9(5) of the CGST Act: for those services, the e-commerce operator pays the tax as if it were the supplier.
Who pays GST when you sell on a marketplace?
Start with the underlying transaction: who made the supply? When an independent seller sells taxable goods or services through a marketplace, the seller is generally the supplier and accounts for GST on that sale, subject to its registration status and the applicable rules. The platform’s role in facilitating the transaction does not, by itself, make it responsible for paying all the GST due on the seller’s supply.
The operator can nevertheless have a separate obligation under Section 52 to collect TCS from qualifying marketplace sales. The Central Board of Indirect Taxes and Customs (CBIC) distinguishes this collection from the supplier’s tax liability in its Sectoral FAQs and TCS FAQ.
| Question | Ordinary third-party marketplace sale |
|---|---|
| Who makes the underlying supply? | The seller, when the seller supplies its own goods or services to the customer. |
| Who generally accounts for GST on that supply? | The seller, subject to registration status, the supply’s tax treatment and applicable exceptions. |
| What might the operator collect? | Section 52 TCS on qualifying net taxable supplies where the operator collects the consideration. |
| Does TCS mean the operator paid all GST on the sale? | No. TCS is a separate collection mechanism, with the deposited amount credited to the registered actual supplier’s electronic cash ledger. |
| When can the operator itself be liable for GST as supplier? | For services specifically notified under Section 9(5), if the conditions for that provision are met. |
What the seller is responsible for
For an ordinary sale by a third-party seller, the seller is responsible for the seller-side GST treatment of its supply. Depending on the transaction and the seller’s registration status, that generally includes accounting for applicable output tax, issuing the required invoice and filing applicable returns. The exact obligations can vary with the type and location of the supply, registration rules, and any applicable notification.
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A seller should not treat the platform’s TCS deduction as proof that the marketplace has settled the seller’s entire GST bill. TCS is a credit mechanism, not a substitute for working out the tax due on the underlying supply.
What the e-commerce operator is responsible for
CBIC describes an e-commerce operator as a person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. Under Section 52 of the CGST Act, an operator must collect TCS when the relevant statutory conditions apply: the supplies are taxable supplies made through it by other suppliers, and the operator collects the consideration, subject to the Act and notifications.
The operator also has its own reporting and remittance responsibilities for TCS. CBIC’s TCS FAQ describes reporting collections and supplies through a prescribed statement and depositing the collected amount. Forms, deadlines and portal instructions can change, so check current CBIC and GST portal guidance before relying on an operational detail.
How Section 52 TCS works—and what it does not mean
TCS is calculated on the net value of qualifying taxable supplies made through the operator, with returned supplies taken into account under the applicable rules. The operator reports and remits the amount collected. CBIC explains that deposited TCS is reflected in the registered actual supplier’s electronic cash ledger, where it can be used to discharge the supplier’s tax liability.
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Do not assume the historical FAQ rate is still current
Section 52 sets a maximum TCS rate of one per cent, with the actual rate to be notified by the Government on the GST Council’s recommendations. CBIC’s FAQ dated 30 November 2018 lists historical rates of 0.5% under each relevant central and state or Union Territory Act for intra-State supplies, and 1% under the IGST Act for inter-State supplies. Those dated figures should not be treated as the current rate without checking the applicable notification and effective date. The official CBIC Act text is available at The Central Goods and Services Tax Act.
The Section 9(5) exception: notified services
Section 9(5) allows the Government to notify categories of services supplied through an e-commerce operator for which the operator pays GST as if it were the supplier liable for tax. This is a targeted exception, not a general rule for all marketplace sales, all services or goods sold online.
CBIC’s Sectoral FAQ describes the exception as applying “only in case of services notified under Sec. 9(5) of the CGST Act, 2017.” Whether it applies depends on the specific service and the relevant notification. Check those facts before treating the platform as the person liable to pay tax.
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Responsibility for GST on a sale and the requirement to register are related but distinct questions. CBIC materials describe compulsory-registration rules for some suppliers selling through operators required to collect TCS, as well as an exception for certain service suppliers under a notification. The applicable result depends on current law, the seller’s circumstances, the supply and the relevant notification.
CBIC’s FAQ materials include historical threshold figures, but those dated amounts should not be relied on as current registration advice without checking the present rules and notifications for the seller’s state and supply type. The operator also has its own registration obligations. For an individual seller, confirm current requirements with CBIC guidance or a qualified GST professional rather than inferring registration status from the fact that a marketplace accepts the listing.
When a marketplace sale may follow a different rule
- The platform sells on its own account: A platform selling its own goods or services is not necessarily acting as a marketplace for another supplier’s sale. CBIC says Section 52 does not require TCS for a seller’s own-account sales through its own website. Look at who actually supplies the customer, not just the platform’s branding.
- The platform collects no consideration: Section 52’s collection condition matters. The operator’s TCS obligation cannot be assumed without checking how payment is collected and the other statutory conditions.
- A service is notified under Section 9(5): The operator may be liable to pay GST for that service as if it were the supplier. Confirm the service falls within the relevant notification.
- A registration exception or special supply rule applies: Registration, tax treatment and reporting can depend on the seller’s facts and current notifications.
- The transaction is cross-border or otherwise outside the ordinary domestic example: Additional provisions may affect the result; the ordinary third-party marketplace rule should not be applied without checking the transaction structure and applicable law.
A practical way to check your marketplace GST position
- Identify the supplier. Confirm whether you or the platform is making the supply to the customer, rather than relying on the marketplace name.
- Classify the supply. Establish whether it is goods or services, whether it is taxable, and whether a service-specific Section 9(5) notification may apply.
- Check the payment flow. Determine whether the operator collects the customer’s consideration; that is material to Section 52 TCS.
- Verify registration and reporting requirements. Check the current law and notifications for your supply, location and seller circumstances.
- Reconcile TCS records. Compare the operator’s reported collections with your marketplace statements and check that eligible deposited TCS appears in your electronic cash ledger.
- Confirm current rates and deadlines. Use current notifications and portal instructions rather than relying on older FAQ figures or filing details.
These distinctions follow the CGST framework and CBIC guidance; the precise outcome depends on the transaction, current notifications and applicable GST rules.
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