Virevon Insights

Tag: TCS

  • Marketplace Settlement Reconciliation for Amazon and Flipkart Sellers

    Marketplace Settlement Reconciliation for Amazon and Flipkart Sellers

    Selling on Amazon, Flipkart and other marketplaces brings reach and volume, but the money that reaches your bank account rarely matches the sales figure on your dashboard. Commissions, shipping charges, storage fees, GST on fees, tax collected at source, TDS, returns, promotions and reserves all sit in between. Regular e-commerce settlement reconciliation is the only way to know your real margin, claim every credit you are entitled to and keep your GST and income-tax filings consistent.

    This guide explains what goes into a marketplace settlement, a step-by-step reconciliation method, a worked example for a single order, and the common leakages sellers recover once they start reconciling properly.

    Key takeaways

    • Reconcile at the order level: each order ID should trace from the order report to the settlement report and then to the bank credit.
    • Marketplace fees carry 18% GST, which is usually available as input tax credit when the invoices are correctly captured.
    • GST TCS at 0.5% of net taxable supplies and income-tax TDS at 0.1% under section 194-O are deducted from payouts and must be claimed back through returns.
    • Returns, customer refunds, RTO shipments and reimbursement claims are where most money is lost if not tracked.
    • A monthly routine tied to your GST filing calendar keeps the books, returns and marketplace data aligned.

    What a marketplace settlement contains

    Marketplaces pay sellers periodically, often weekly or more frequently, net of deductions. A typical settlement includes:

    • Order value: the selling price including GST, and shipping charges collected from customers where applicable.
    • Marketplace fees: referral or commission fee, fixed or closing fee, shipping or weight handling fee, pick-and-pack and storage fees for fulfilment programmes, and payment collection fees.
    • GST on fees: charged at 18% by the marketplace on its services.
    • GST TCS: collected by the marketplace under section 52 of the CGST Act.
    • Income-tax TDS: deducted under section 194-O (carried forward under the Income-tax Act, 2025).
    • Adjustments: customer returns, refunds, cancellations, promotional discounts, advertising charges and reserves or holds.
    • Reimbursements: compensation for lost or damaged inventory and other claims.

    Each marketplace provides downloadable order, payment and tax reports. Save them monthly, because older reports can be harder to retrieve later.

    A worked example for one order

    A seller sells a product at ₹1,180 including GST at 18% (taxable value ₹1,000, GST ₹180). The settlement for this order shows:

    ItemAmount (₹)
    Order value received from customer1,180
    Less: commission, closing and shipping fees(200)
    Less: GST on fees at 18%(36)
    Less: GST TCS at 0.5% of taxable value(5)
    Less: TDS under section 194-O at 0.1%(1)
    Net amount credited to bank938

    In the books, this should be recorded as:

    • Sales ₹1,000 and output GST ₹180 (reported in GSTR-1 and GSTR-3B)
    • Marketplace fees ₹200 as an expense, with ₹36 input tax credit
    • TCS ₹5 as a receivable, claimed from the electronic cash ledger after it appears in your TCS credit data
    • TDS ₹1 as advance tax credit, claimed in the income-tax return
    • Bank ₹938

    Most sellers make the mistake of booking ₹938 as sales. That understates turnover, loses the ITC on fees and leaves TCS and TDS unclaimed. Our article on GST for e-commerce sellers explains the TCS mechanism in more detail.

    Step-by-step e-commerce settlement reconciliation

    1. Download monthly reports: order or sales report, settlement or payment report, tax invoice reports for fees, returns report and inventory reports for fulfilment stock.
    2. Build an order-level sheet: list every order ID with invoice value, GST, fees, TCS, TDS, adjustments and net settlement.
    3. Match to the bank: group orders by settlement ID and match each payout to the bank credit. Our guide on bank reconciliation best practices covers the bank side.
    4. Verify fees: compare charged fees with the marketplace’s published rate card for the category and weight slab. Flag unusual charges.
    5. Track returns and cancellations: ensure refunded orders are reversed in sales through credit notes, and that returned stock is received back in saleable condition or claimed.
    6. Reconcile GST TCS: match TCS in your records with the TCS data filed by the marketplace, and accept it on the GST portal so the credit reaches the cash ledger.
    7. Reconcile TDS: match 194-O TDS with the tax credit statement before filing the income-tax return.
    8. Book summary entries: post monthly journal entries from the reconciled sheet and keep the working as support.

    Common leakages and how to recover them

    • Weight or dimension disputes: incorrect weight slabs lead to higher shipping fees; raise a correction with the marketplace.
    • Lost or damaged inventory in fulfilment centres: file reimbursement claims within the marketplace’s time window.
    • Customer returns not received: a refund issued but no product returned can often be claimed under seller protection programmes.
    • Duplicate or incorrect fee charges: especially after policy changes or promotions.
    • Unclaimed TCS and TDS: small per order but significant across a year.
    • Reserves not released: check that held amounts are released after the holding period.

    Sellers who start reconciling regularly often find that recoveries alone cover the cost of the effort. Keep a simple claims log with the order ID, issue, date raised, amount and outcome, so nothing slips past the marketplace’s claim window.

    Aligning with GST and income-tax filings

    • Sales in GSTR-1 should match your order-level data, and the marketplace’s TCS statement should agree with your sales net of returns.
    • ITC on marketplace fees should reconcile with the invoices appearing in your GSTR-2B.
    • Turnover in the income-tax return should match GST turnover and the marketplace data reflected in the Annual Information Statement.
    • Stock in fulfilment centres should be included in closing inventory at the year end.

    Frequently asked questions

    How often should Amazon and Flipkart settlements be reconciled?

    At least monthly, before filing GST returns. High-volume sellers often reconcile weekly with each settlement cycle.

    Can I claim ITC on marketplace commission?

    Yes, GST charged on marketplace fees is generally available as input tax credit if you are a registered seller and the invoices appear in your GSTR-2B.

    How is GST TCS deducted by marketplaces recovered?

    It is credited to your electronic cash ledger after you accept it on the GST portal, and can then be used to pay tax or claimed as a refund.

    Should I record sales at the net settlement amount?

    No. Record sales at the full invoice value and account for fees, TCS and TDS separately, so that turnover, credits and expenses are all correct.

    If you sell on marketplaces and would like help setting up a monthly settlement reconciliation, our e-commerce accounting team would be happy to help.

    WhatsApp +91 83687 74072
    Send an enquiry

    This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

  • GST for E-commerce Sellers: Registration, TCS under Section 52 and Reconciliation

    GST for E-commerce Sellers: Registration, TCS under Section 52 and Reconciliation

    Selling on marketplaces opens up a national market almost overnight, but it also brings a distinct set of GST rules. GST for e-commerce sellers covers when you must register, how the marketplace collects tax at source (TCS) under section 52 of the CGST Act, and how to reconcile your returns with the data that the platform reports about you.

    This guide explains each of these in plain terms and offers a monthly routine that keeps your GSTR-1, GSTR-3B and TCS credits in agreement.

    Key takeaways

    • Sellers supplying through an e-commerce operator that collects TCS are generally required to register compulsorily, but there are notified exemptions for small service providers and, since 1 October 2023, for small intra-State goods sellers meeting conditions.
    • The operator collects TCS at 0.5% of the net value of taxable supplies (0.25% CGST + 0.25% SGST, or 0.5% IGST), a rate in force since 10 July 2024.
    • The operator files GSTR-8 by the 10th of the following month; the seller’s TCS then appears on the portal and, once accepted, credits the electronic cash ledger.
    • For notified services such as restaurant delivery and cab rides, the operator itself pays GST under section 9(5), and no TCS applies on those supplies.
    • Monthly reconciliation of orders, returns, settlements and GSTR-8 data is the single best protection against mismatch notices.

    Registration: who needs it

    Under section 24 of the CGST Act, a person supplying goods or services through an e-commerce operator required to collect tax at source must register, regardless of turnover. Over time, the government has relaxed this for smaller sellers:

    • Service providers selling through an operator are exempt from registration if their aggregate turnover stays within the normal threshold (₹20 lakh, or ₹10 lakh in special category States).
    • Goods sellers with turnover within the threshold can sell through operators without registration since 1 October 2023, but only for intra-State supplies and subject to conditions such as having a PAN and declaring the State of supply on the platform.
    • Composition taxpayers can supply goods through operators within their State, subject to the platform’s enrolment process, but services through TCS-collecting platforms remain restricted.

    If you plan to sell across States, you will generally need GST registration from the outset.

    How TCS under section 52 works

    Every operator that collects consideration on behalf of sellers must collect TCS on the net value of taxable supplies made through it in a month.

    ElementDetail
    Who collectsThe e-commerce operator
    Rate0.5% (0.25% CGST + 0.25% SGST for intra-State; 0.5% IGST for inter-State)
    BaseTaxable supplies made through the operator, less supplies returned in the month, excluding GST and section 9(5) supplies
    Deposit and returnBy the 10th of the following month, in Form GSTR-8
    Seller’s creditShown on the portal; accepted credit goes to the electronic cash ledger

    A simple example

    In a month, a seller makes taxable sales of ₹10,00,000 (excluding GST) through a marketplace, and customers return goods worth ₹1,00,000. Net value is ₹9,00,000. TCS at 0.5% is ₹4,500. The operator deducts this from the seller’s settlement and reports it in GSTR-8. The seller accepts the TCS entry on the portal and uses it from the cash ledger to pay GST in GSTR-3B, or claims a refund of any excess.

    Section 9(5) services

    For restaurant services delivered through apps, passenger transport through ride-hailing apps, certain accommodation services and some other notified services, the operator is treated as the supplier and pays GST itself. After GST 2.0 (effective 22 September 2025), check the current rates and notified list, including for local delivery services, since the rate structure moved to 5%, 18% and 40%.

    Reconciliation: where most problems start

    The operator’s GSTR-8 tells the tax department, month by month, how much you sold through that platform. If your GSTR-1 shows a different figure, you may receive a notice. A clean monthly reconciliation should compare:

    1. Order report from the seller panel (gross sales, cancellations, returns).
    2. Invoices issued by you or on your behalf through the platform’s tax invoice feature.
    3. GSTR-1: B2C supplies reported with the operator’s GSTIN in the relevant table, and B2B invoices where the buyer gave a GSTIN.
    4. GSTR-8 data shown in your TCS credit section.
    5. Settlement reports: payouts after commission, shipping fees, TCS and TDS.

    Differences usually come from returns in a later month, cancelled orders, timing of invoices near month-end, or wrong State or GSTIN mapping in multi-warehouse setups. Fix them in the next return and keep a reconciliation working file for every month.

    Remember also that the platform’s commission and fees are services to you, with GST charged by the operator. That GST is eligible input tax credit if it appears in your GSTR-2B, so include it in your GSTR-2B vs GSTR-3B reconciliation.

    Multi-State warehouses and income-tax TDS

    Marketplaces that store your stock in fulfilment centres in other States create a place-of-business issue: each State where your goods are stored generally requires registration or an additional place of business. Plan your registrations before enabling multi-State fulfilment.

    Separately from GST TCS, the operator also deducts income-tax TDS on the gross amount of sales (the provision earlier known as section 194-O, now in section 393 of the Income-tax Act 2025). Track both, as they appear in different places: GST TCS on the GST portal, and income-tax TDS in your annual tax credit statement.

    Monthly checklist for online sellers

    • Download order, return and settlement reports from every platform by the 3rd.
    • Reconcile sales with invoices and prepare GSTR-1 data platform-wise.
    • Accept or query TCS entries on the portal after GSTR-8 is filed.
    • Review input tax credit on platform fees in GSTR-2B.
    • File GSTR-3B using TCS credit in the cash ledger where helpful.
    • Keep month-wise reconciliation working papers for audits and notices; our guide on GSTR-1 vs GSTR-3B mismatch notices explains why this matters.

    Frequently asked questions

    Do I need GST registration to sell on a marketplace?

    Generally yes, unless you fall within a notified exemption, such as a small service provider within the threshold, or a small goods seller making only intra-State supplies and meeting the prescribed conditions.

    What is the current TCS rate under section 52?

    0.5% of the net value of taxable supplies, split as 0.25% CGST and 0.25% SGST, or 0.5% IGST for inter-State supplies, effective from 10 July 2024.

    How do I use the TCS collected by the marketplace?

    Once the operator files GSTR-8, accept the TCS entries on the GST portal. The amount is credited to your electronic cash ledger and can be used to pay GST or claimed as a refund.

    Is TCS charged on returned goods?

    TCS is charged on the net value, so goods returned during the month reduce the base on which TCS is collected.

    If you sell through one or more marketplaces and want your GST returns, TCS credits and settlements reconciled every month, we would be glad to help.

    WhatsApp +91 83687 74072
    Send an enquiry

    This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

  • Liberalised Remittance Scheme (LRS): Limits, Purposes and TCS on Foreign Remittances

    Liberalised Remittance Scheme (LRS): Limits, Purposes and TCS on Foreign Remittances

    The Liberalised Remittance Scheme (LRS) lets resident individuals send money abroad for a wide range of purposes, from a child’s university fees to an overseas investment. Alongside the foreign exchange rules, there is an income-tax angle: banks collect tax at source on many remittances, and understanding the LRS remittance TCS rules helps you plan cash flow and claim the credit properly.

    The TCS rates were simplified from 1 April 2026 by the Finance Act 2026, with lower rates for education, medical treatment and overseas tour packages. This guide explains the LRS limit, the permitted purposes, the current TCS structure and how to get the TCS back.

    Key takeaways

    • Resident individuals can remit up to USD 250,000 per financial year under LRS for permitted current and capital account purposes.
    • From 1 April 2026, TCS on education and medical remittances is 2% above ₹10 lakh, and nil where education is funded by a loan from a financial institution.
    • Overseas tour packages attract 2% TCS from the first rupee.
    • Other purposes such as investments and gifts attract 20% TCS above ₹10 lakh in a financial year.
    • TCS is not an extra cost: it is credited against your tax liability and can be refunded through your return.

    What LRS allows

    LRS is framed by the Reserve Bank of India under FEMA. The limit of USD 250,000 applies per resident individual per financial year, including minors (through a guardian), and covers all permitted purposes together.

    Commonly used purposes include:

    • Education abroad, including tuition and living expenses.
    • Medical treatment abroad.
    • Travel, both private and business, and overseas tour packages.
    • Gifts and donations to persons or bodies abroad.
    • Maintenance of close relatives living abroad.
    • Investments, such as listed foreign shares, overseas mutual funds, and immovable property abroad, subject to the overseas investment rules.
    • Opening and maintaining a foreign currency account with a bank abroad.

    Certain remittances are not allowed under LRS, such as margin or speculative trading abroad, lottery and similar payments, and remittances to countries identified as non-cooperative by the FATF. Businesses making overseas investments follow the separate overseas investment framework; our guide to overseas direct investment rules covers that route.

    The remittance process

    1. Choose an authorised dealer bank and the purpose code for the remittance.
    2. Submit Form A2 (the purpose declaration) along with your PAN, which is mandatory for LRS.
    3. Provide supporting documents such as an admission letter, hospital estimate, tour operator invoice or investment account details.
    4. The bank checks the LRS limit and collects TCS where applicable.
    5. Keep the remittance advice and TCS certificate for your records.

    LRS remittance TCS rates from 1 April 2026

    The table below summarises the structure that applies to remittances made on or after 1 April 2026.

    PurposeUp to ₹10 lakh in a financial yearAbove ₹10 lakh
    Education funded by a loan from a financial institutionNilNil
    Education (self-funded) or medical treatmentNil2% on the excess
    Overseas tour package2% from the first rupee2%
    Other purposes (investment, gifts, maintenance, etc.)Nil20% on the excess

    The ₹10 lakh threshold is applied per individual for the financial year across all LRS remittances through the same collector, so it is worth planning larger payments early in the year and keeping all remittance records together.

    Worked examples

    • Self-funded tuition of ₹25 lakh: no TCS on the first ₹10 lakh; 2% on ₹15 lakh = ₹30,000.
    • Overseas tour package of ₹4 lakh: 2% = ₹8,000.
    • Investment of ₹30 lakh in US shares: 20% on ₹20 lakh = ₹4,00,000, which is a significant cash-flow item until adjusted in your return.

    Under the Income-tax Act 2025, these rules continue in the corresponding TCS provision, and TCS credit is reflected in the annual tax statement (Form 168, which replaced Form 26AS).

    Getting the TCS back

    TCS is collected in your name against your PAN. You can:

    • Claim credit in your income-tax return for the tax year in which it was collected. If your total tax liability is lower, the excess is refunded.
    • For salaried employees, ask your employer to take the TCS into account while computing tax deduction on salary, so less tax is deducted during the year.

    Always check that the TCS appears correctly in your annual tax statement before filing. Where a bank has not reported it, ask for the TCS certificate and a correction.

    Practical tips for families and investors

    • Plan the purpose correctly: education and medical remittances enjoy lower rates, so use the right purpose code with proper documentation.
    • Use education loans where sensible: remittances funded by a loan from a financial institution attract nil TCS.
    • Spread investment remittances thoughtfully and budget for the 20% TCS on amounts above ₹10 lakh.
    • Keep a remittance log for the family: date, bank, purpose, amount in USD and INR, and TCS collected.
    • Report foreign assets in your return where required, especially after investing abroad.

    Frequently asked questions

    What is the LRS limit for 2026-27?

    The limit is USD 250,000 per resident individual per financial year, covering all permitted purposes together.

    What is the TCS on education remittances now?

    From 1 April 2026, self-funded education remittances attract 2% TCS on amounts above ₹10 lakh, and nil TCS where funded by a loan from a financial institution.

    Is TCS a permanent cost?

    No. TCS is an advance collection of tax. You can adjust it against your tax liability and claim any excess as a refund in your return.

    Is PAN mandatory for LRS remittances?

    Yes. PAN is required for remittances under LRS, and TCS is collected and reported against it.

    If you are planning education, travel or investment remittances abroad, our FEMA and tax team will be happy to help you plan the route, documents and TCS efficiently.

    WhatsApp +91 83687 74072
    Send an enquiry

    This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.