Selling on Amazon or Flipkart: Matching Marketplace TCS and Settlement Reports to Your Books
Marketplaces collect 0.5% GST TCS on net taxable sales and deduct 0.1% income-tax TDS on gross sales, then pay out net of fees and returns. Record sales from your own invoices, fees as expenses with GST credit, and TCS and TDS as amounts receivable. Accept the TCS on the GST portal.
A seller ships ₹10 lakh of orders on a marketplace and receives about ₹8.3 lakh. The gap is commission, shipping, returns, fees and two different taxes. Unless each part is recorded, the books overstate debtors and the seller misses tax credits it is owed.
The two taxes deducted from your payout
| Tax | Rate | On what | Where you see it | How you get it back |
|---|---|---|---|---|
| GST TCS (Section 52 of the CGST Act) | 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) | Net taxable value of sales through the marketplace | The marketplace files GSTR-8 by the 10th; it appears on your GST portal | Accept it on the portal; it goes to your cash ledger to pay GST |
| Income-tax TDS on e-commerce sales | 0.1% | Gross amount of sales | Your annual tax statement | Claim it in your income-tax return |
The GST TCS rate was cut from 1% to 0.5% on 10 July 2024. The income-tax TDS was cut from 1% to 0.1% on 1 October 2024.
What a settlement contains
- ✓Gross sales, less returns and cancellations
- ✓Commission or referral fee
- ✓Shipping and fulfilment fees
- ✓Payment collection and fixed closing fees
- ✓Advertising charges
- ✓GST charged by the marketplace on its fees
- ✓GST TCS and income-tax TDS
- ✓Net amount paid to your bank
How to record it
- Record sales from your own invoices, not from the payout, so GST is reported correctly.
- Record each fee as an expense, and the GST on it as input credit, using the marketplace's monthly tax invoice.
- Record TCS and TDS as amounts receivable from the government, not as expenses.
- Record the payout against the marketplace's account. The balance on that account should come to zero once returns and adjustments settle.
A worked example
A Tiruppur garment seller's September 2026 settlement on one marketplace:
| Item | Amount |
|---|---|
| Gross sales (including GST) | ₹10,50,000 |
| Returns | (₹50,000) |
| Commission and fees | (₹1,20,000) |
| GST on fees at 18% | (₹21,600) |
| GST TCS at 0.5% of net taxable value (₹9,52,381) | (₹4,762) |
| Income-tax TDS at 0.1% of gross sales | (₹1,000) |
| Net payout | ₹8,52,638 |
The seller claims ₹21,600 as input credit, accepts ₹4,762 of TCS on the GST portal, and claims ₹1,000 of TDS in the income-tax return. None of these are costs.
GST return points
- ✓Report sales made through a marketplace in the separate table in GSTR-1 for supplies through e-commerce operators.
- ✓Match your marketplace sales with the figures in the marketplace's GSTR-8 every month. Differences usually come from returns recorded in different months.
- ✓Register in each state where you keep stock in the marketplace's warehouses.
Frequently asked questions
Can I use the TCS to pay any GST?
Once accepted, it sits in your electronic cash ledger and can be used to pay GST, or claimed as a refund.
What if the TCS on the portal is less than in the settlement?
Ask the marketplace's seller support. They may have reported it under a different month or GSTIN.
Do I still need to raise my own invoices?
Yes. Most marketplaces generate invoices in your name, but they are your invoices, and you are responsible for them.
Sources
- ✓GST TCS FAQs, GST Council
- ✓TCS under Section 52 explained, Patron Accounting
- ✓Section 194-O TDS on e-commerce, Patron Accounting
This is a summary, not legal advice. Confirm with your chartered accountant before you rely on it.
Written by
Founder, Airwix Technologies (Sleet)
Vatsal Sutariya is the founder of Airwix Technologies in Ahmedabad, the company that builds Sleet: SleetHR for HR and payroll, and Sleet Accounting for GST billing and books. He writes about GST, invoicing, business tax and choosing software for Indian businesses, and checks each rule against the official notification before it is published.
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