In short
- Treat each marketplace as a party ledger under Sundry Debtors. Sales go in at full value; everything the marketplace keeps comes off that ledger.
- Sales and returns come from the same reports you use for GSTR-1, so the books and the return agree.
- Fees are an expense, and the GST on them is usually claimable input tax credit.
- GST TCS (0.5%) and income-tax TDS under 194-O (0.1% since 1 October 2024) are two different credits. Book each as a receivable, not an expense.
- The bank payout is a Receipt against the marketplace ledger. Its balance is whatever the marketplace still owes.
Online sellers often book the bank credit from Amazon or Meesho as "sales". It's quick, but it understates sales by every rupee of fees, TCS and TDS, loses credits the client can claim back, and leaves GSTR-1 (built from gross sales) looking very different from the books. The fix is to treat the marketplace as a customer that collects money for you and settles later, net of its charges.
Set up these ledgers once per client
| Ledger | Group | Used for |
|---|---|---|
| Amazon (or Flipkart, Meesho…) – receivable | Sundry Debtors | One per marketplace. All the entries below run through it |
| Sales (by rate or state, as your books need) | Sales Accounts | Taxable value of sales |
| Output CGST / SGST / IGST | Duties & Taxes | GST on sales |
| Sales Returns | Sales Accounts | Taxable value of returns |
| Marketplace fees (commission, shipping, closing fees) | Indirect Expenses | What the marketplace charges |
| Input CGST / SGST / IGST | Duties & Taxes | GST on those fees, when claimable |
| GST TCS receivable | Current Assets | TCS collected under GST section 52 |
| TDS receivable (194-O) | Loans & Advances (Asset) | Income-tax TDS deducted by the marketplace |
A worked month on Amazon
An Amazon seller in October, inter-state sales at 18% GST. The figures come from the month's sales report, returns report, fee invoice and settlement report.
| # | Entry | Voucher | Debit | Credit | Amount |
|---|---|---|---|---|---|
| 1 | Sales for the month | Sales | Amazon receivable 1,18,000 | Sales 1,00,000; Output IGST 18,000 | 1,18,000 |
| 2 | Returns for the month | Credit Note | Sales Returns 10,000; Output IGST 1,800 | Amazon receivable 11,800 | 11,800 |
| 3 | Commission and shipping fees | Purchase or Journal | Marketplace fees 12,000; Input IGST 2,160 | Amazon receivable 14,160 | 14,160 |
| 4 | GST TCS (0.5% of net taxable value 90,000) | Journal | GST TCS receivable 450 | Amazon receivable 450 | 450 |
| 5 | TDS under 194-O (0.1%, figure from the settlement report) | Journal | TDS receivable (194-O) 90 | Amazon receivable 90 | 90 |
| 6 | Payout received in the bank | Receipt | Bank 91,500 | Amazon receivable 91,500 | 91,500 |
After entry 6 the Amazon receivable is zero. In a real month it rarely is, because payouts run on the marketplace's own cycle. A balance left over should equal what the settlement report says is still to be paid. If it doesn't, something is missing or doubled.
Where each figure comes from
| Entry | Source |
|---|---|
| Sales and returns | The marketplace sales and returns reports, the same ones used for GSTR-1: Amazon MTR, Meesho GST report, Flipkart sales report |
| Fees and the GST on them | The marketplace's tax invoices for its services, and the settlement report |
| GST TCS | The settlement report, then the TCS shown on the GST portal once the marketplace files GSTR-8 |
| TDS under 194-O | The settlement report, then Form 26AS / AIS |
| Payout | The client's bank statement |
GST TCS and 194-O TDS are different credits
| GST TCS | Income-tax TDS (194-O) | |
|---|---|---|
| Law | GST, section 52 | Income-tax Act, section 194-O |
| Rate | 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) since 10 July 2024 | 0.1% since 1 October 2024 (1% before) |
| Charged on | Net value of taxable supplies (sales less returns, before GST) | Gross amount of sales, as the marketplace computes it |
| Seen in | GST portal, after the marketplace files GSTR-8 | Form 26AS / AIS |
| Claimed by | Accepting it on the portal; it goes to the electronic cash ledger | The seller's income-tax return |
| In Tally | GST TCS receivable, cleared when used to pay GST | TDS receivable, cleared against the year's tax |
Booking either as an expense throws away a credit the client is entitled to. Booking them into one "TCS/TDS" ledger makes both impossible to reconcile.
Other lines on a settlement
- Advertising (sponsored products, ads): an expense, with GST input if the marketplace invoices it to the client's GSTIN.
- Penalties and other deductions: an expense. Read the description before posting.
- Reimbursements for lost or damaged stock: other income. Check the GST treatment against the facts.
- Reserves and holds: amounts held back and released later. They're still owed, so they stay in the receivable.
- Several payouts a month: one Receipt per bank credit. The receivable carries the difference between them.
Month-end checks
- Marketplace receivable balance = amount the settlement report shows as still to be paid.
- Sales and returns in the books = the figures in the client's GSTR-1 for the month.
- GST TCS receivable = TCS shown on the GST portal for the period.
- TDS receivable (194-O) = TDS in Form 26AS / AIS for the marketplace.
- Input GST on fees appears in the client's GSTR-2B before it's claimed.
Mistakes that cost clients money
- Posting the payout as sales: sales understated, fees missing, credits lost.
- Posting TCS or TDS as expenses: the client pays tax that was already collected.
- Ignoring the GST on fees: claimable input tax credit never claimed.
- Booking sales per payout: books and GSTR-1 never match month to month.
- One receivable for all marketplaces: impossible to tell which one owes what.
Tally Solutions has a broader guide to reconciling platform settlements if you want to go further.
Doing it with FileKey
FileKey's E-Commerce GSTR-1 reads the same marketplace reports and builds the month's sales and returns, with a state-wise TCS panel. Its Tally XML export lets you set the sales ledger, party naming and GST ledgers, so the sales entries in Tally match the return you file. For the payouts, convert the client's statement with the bank statement to Tally converter and set those rows to the marketplace receivable ledger before you export, so each payout clears against the right party.
Frequently asked questions
Is the Amazon payout the same as sales?
No. The payout is sales less returns, fees, GST TCS and 194-O TDS. Book sales at full value from the sales report, and the payout as a receipt against the Amazon receivable ledger.
How do I record GST TCS from a marketplace in Tally?
Debit a GST TCS receivable ledger (current asset) and credit the marketplace receivable. Once you accept the TCS on the GST portal and it reaches the electronic cash ledger, clear the receivable when you use it to pay GST.
What is the difference between GST TCS and TDS under section 194-O?
GST TCS is collected under GST section 52 at 0.5% of net taxable sales and claimed through the GST portal. TDS under section 194-O is income tax deducted at 0.1% (since 1 October 2024) of gross sales and claimed in the income-tax return. They need separate ledgers.
Can the seller claim GST on marketplace commission?
Usually yes, if the client is registered and the marketplace's fee invoices are issued to the client's GSTIN. Check that they appear in GSTR-2B before claiming.
Why doesn't the marketplace ledger come to zero at month end?
Payouts follow the marketplace's settlement cycle, not the calendar month, and some amounts are held in reserve. The balance should match what the settlement report shows as still to be paid.
Sources and further reading
- Section 194-O TDS rate reduced to 0.1% (TaxGuru)
- E-commerce operator GST TCS rate reduced (TaxGuru)
- Tally: accounting for D2C and marketplace sellers
Rules change by notification and advisory. Check the GST portal before you file.
Written by the FileKey Team
FileKey builds the tools CA firms use for e-commerce GSTR-1 and bank statement conversion. We write these guides from the questions accountants and sellers ask us every filing month. Spotted something out of date? Write to [email protected] and we will fix it. More about FileKey.