Amazon and Flipkart Seller Accounting: A Practical Guide for India

Ask a marketplace seller what their margin is and you usually get one of two answers. The first comes from the platform dashboard, which knows about commission but not about your purchase cost, your capital, your returns handling or the staff who process them. The second comes from the annual accounts, which arrive nine months late and average everything into a single line.

Neither answer runs a business. This article covers what a marketplace seller’s books need to do, in the order the work actually happens: register correctly, capture the fee stack, handle stock across states, deal with returns, and produce a margin figure you can act on.

Marketplace seller accounting records gross sales from order data, books each platform fee as a separate expense with input tax credit, treats GST TCS as a cash-ledger asset and income-tax TDS as advance tax, and reconciles the settlement report to the bank.

If you are starting from scratch, read the complete guide to e-commerce accounting in India first. This piece assumes you are already selling.

Step one: get the registration footprint right

Two registration questions decide how messy the next twelve months are.

Do you need GST at all?

If you sell through an operator that collects tax at source, Section 24(ix) of the CGST Act says yes, whatever your turnover. The narrow exemption for small sellers of goods under Notification No. 34/2023-Central Tax, effective 1 October 2023, requires you to stay under your state threshold, make no inter-state supplies, sell in one state only, hold a PAN and take an enrolment number before your first sale. A single order shipped across a state line ends it.

Where does your stock sit?

This is the question that catches growing sellers. If you use a marketplace fulfilment programme, the platform will not accept your inventory into a warehouse unless that warehouse address appears on your GST registration. Adding it is a REG-14 amendment, with no government fee, and the process is set out in adding a fulfilment centre to your GST registration or handled directly through our add place of business service.

Where a fulfilment centre is in a different state, you need a registration in that state, and then a second consequence follows immediately.

Moving your own stock is a taxable supply

Once you hold registrations in two states, those two registrations are distinct persons under GST. Sending your own goods from your Kolkata GSTIN to a fulfilment centre operating under your Karnataka GSTIN is a supply under Schedule I of the CGST Act, even though nothing was sold and no money moved.

It needs a tax invoice, IGST charged at the applicable rate, an e-way bill where thresholds apply, and credit taken at the receiving end. Done correctly it is tax neutral and simply moves credit around. Skipped entirely, which is common, it produces a stock ledger that does not agree with the GST returns and a problem that surfaces in an audit two years later, with interest.

The fee stack, and why each line needs its own account

Every platform structures deductions differently and renames them from time to time. Rather than memorising labels, group them by function. The functional buckets are stable even when the names change.

Bucket	What it is	Typical treatment
Commission or referral fee	A percentage of order value, varying by category	Selling expense, GST creditable
Closing or fixed fee	Flat charge per order or per price band	Selling expense, GST creditable
Shipping, weight handling, fulfilment	Charge for moving the parcel	Selling expense, GST creditable
Collection or payment handling fee	Charge for collecting the customer’s money	Selling expense, GST creditable
Storage	Charge for stock held at a fulfilment centre	Period cost, not inventory cost
Advertising	Sponsored listings, coupons, deal fees	Marketing expense, GST creditable
Penalties and SLA charges	Late dispatch, cancellations	Other expense
Reimbursements	Lost or damaged stock, fee corrections	Other income, not a reduction of fees

Three rules follow.

Never net fees against sales

Netting hides the one number you most need to watch, which is total platform cost as a percentage of gross sales. Tracked monthly, that percentage tells you when a category has quietly become unviable.

Claim the input credit

Platforms issue tax invoices for their fees, generally with GST at 18 per cent. Those invoices should appear in your GSTR-2B and need action in the Invoice Management System before the credit is available. Doing nothing in the IMS is itself a decision, as we cover in IMS and the end of provisional ITC. Sellers routinely forfeit a meaningful sum here simply by never booking the fee invoices.

Book storage as a period cost

It is tempting to treat warehousing as part of inventory cost. Storage of finished goods is not part of the cost of bringing inventory to its present location and condition, so it belongs in the profit and loss account of the month it relates to.

The two taxes in your settlement file

Both appear on the same statement and are constantly confused with each other.

GST TCS, Section 52

The operator collects 0.5 per cent of the net value of taxable supplies made through it, being 0.25 per cent CGST plus 0.25 per cent SGST intra-state, or 0.5 per cent IGST inter-state. That rate has applied since 10 July 2024 under Notification No. 15/2024-Central Tax. It is computed on net value, so returns in the month reduce it. The operator reports it in Form GSTR-8 by the 10th of the following month. Accept it in your TDS and TCS credit received statement and it lands in your electronic cash ledger, where it pays output tax.

Income-tax TDS, 0.1 per cent

Deducted on the gross amount of sales facilitated. The rate dropped from 1 per cent on 1 October 2024. The provision was Section 194-O of the Income-tax Act, 1961 and, from 1 April 2026, is Section 393(1), Table Sl. No. 8(v) of the Income-tax Act, 2025. It becomes advance tax against your PAN and should be agreed to your annual tax statement and AIS every quarter.

In the books, TCS is an asset that becomes a cash-ledger balance. TDS is an asset that becomes a tax credit. Neither is an expense. If either is sitting in your profit and loss account, your tax cost is overstated and your profit is understated.

Returns and RTO, the line that decides your category

A marketplace business lives or dies on what happens after dispatch. Two different events need two different treatments.

Customer returns

The sale reverses. Issue a credit note with GST so the output tax reverses too. That reversal is time-limited: a credit note affecting tax must be declared by the earlier of 30 November following the end of the financial year or the date the annual return for that year is filed. Commercial refunds after that still happen, but the tax stays paid.

Return to origin

The parcel never reached the customer. There was no supply, so there is no sale to reverse, but there is real money gone: forward shipping, return shipping and often a handling charge. Book it as a distribution cost and track it as a rate, not just a rupee figure.

Then track what came back. Saleable stock returns to inventory at cost. Damaged stock is written down. Stock that never arrives is a claim against the platform, and if it is reimbursed, that reimbursement is income rather than a reduction of fees.

A month-end margin bridge

Here is what a month should look like when the work is done. Figures are illustrative and rounded for clarity.

Line	₹	% of gross sales
Gross sales, at invoice value, excluding GST	20,00,000	100.0
Less: returns and cancellations	(2,40,000)	(12.0)
Net sales	17,60,000	88.0
Less: cost of goods sold	(9,68,000)	(48.4)
Gross profit	7,92,000	39.6
Less: commission and closing fees	(2,64,000)	(13.2)
Less: shipping and fulfilment	(1,58,000)	(7.9)
Less: storage	(22,000)	(1.1)
Less: RTO and return handling	(46,000)	(2.3)
Less: advertising	(1,40,000)	(7.0)
Contribution margin	1,62,000	8.1

Note what is not in this table. GST is not a cost, it flows through. TCS and TDS are not costs, they are credits. What is left, 8.1 per cent, is what pays your salaries, rent, packaging staff, interest and finally your own drawings.

Now the useful version of the same exercise: build this per category, and then per SKU for your top twenty listings. In almost every seller file we open, at least one high-revenue SKU is running at a negative contribution because its return rate and advertising cost outweigh a thin gross margin. It is invisible at company level and obvious at SKU level.

Not sure what your real per-SKU margin is? Talk to a CA who works on marketplace books.

The entries, briefly

For one settlement cycle, the shape is always the same.

Debit marketplace receivable, credit sales and output GST, using order data at gross value.
Debit each fee expense and the input GST on it, credit marketplace receivable.
Debit TCS receivable, credit marketplace receivable.
Debit TDS receivable, credit marketplace receivable.
Debit bank, credit marketplace receivable, for the amount actually received.
The marketplace receivable balance left over is your reconciling item: deferred settlement, reserve balance, or an error.

That final balance is the health check. If it does not close to a number you can explain, something in the cycle is wrong. E-commerce reconciliation covers how to chase it down.

Compliance dates a seller cannot miss

Item	Timing
GSTR-1	Monthly, or quarterly under QRMP
GSTR-3B	Monthly, or quarterly under QRMP with monthly payment
Accepting TCS credit	Monthly, after the operator files GSTR-8 by the 10th
Credit notes affecting output tax	By 30 November following the financial year, or the annual return date if earlier
GSTR-9 annual return	Where aggregate turnover exceeds ₹2 crore
GSTR-9C reconciliation statement	Where aggregate turnover exceeds ₹5 crore, self-certified
E-invoicing	Where aggregate turnover exceeded ₹5 crore in any year from 2017-18
Income tax return and, where applicable, tax audit	As per the due dates for the tax year

Since the July 2025 tax period the outward liability in GSTR-3B is locked to your GSTR-1, so corrections have to run through GSTR-1A before filing. That single change moved reconciliation from a post-filing clean-up to a pre-filing requirement. Our compliance calendar tracks the dates.

Six mistakes we see most often in seller books

Revenue recorded from settlement credits rather than order data, understating turnover.
TCS parked in an expense account and never claimed in the cash ledger.
Platform fee invoices never booked, so the input credit is lost permanently.
Stock moved to an out-of-state fulfilment centre with no invoice and no IGST.
RTO treated as a return, so the sales figure is reduced for something that was never sold.
One channel’s numbers merged into another, making channel profitability unknowable.

Do you need a specialist

A single-platform, single-state seller with modest volumes does not need a specialist firm. Once you are on two or more platforms, holding stock in more than one state, running paid advertising and dealing with returns at scale, the monthly work is a discipline rather than a task, and the errors compound quietly.

We take the settlement apart every month and put it back together correctly, inside the accounting software you already own. If that is the stage you are at, e-commerce accounting services: scope, cost and how to choose sets out what the work involves.

Frequently asked questions

Q: Is TCS deducted by Amazon or Flipkart an expense?

A: No. It is your money held with the government. The operator collects 0.5 per cent of the net value of your taxable supplies under Section 52 and reports it in GSTR-8. Once you accept it in your TDS and TCS credit received statement, it appears in your electronic cash ledger and pays your output GST. Booking it as an expense overstates your costs and leaves the credit unused.

Q: Do I need a separate GST registration for every fulfilment centre?

A: You need a registration in every state where you have a place of business, which includes a fulfilment centre holding your stock. Within a state, additional warehouses are added to the existing registration as an additional place of business through a REG-14 amendment.

Q: Why does my marketplace dashboard show a different profit from my books?

A: Dashboards know platform economics, not yours. They generally exclude purchase cost, capital cost, packaging, staff, GST timing effects and often the full cost of returns. They also report on their own calendar rather than your accounting period. The two will never agree exactly, and only one of them is auditable.

Q: How do I claim credit for TDS deducted by a marketplace?

A: It is deducted at 0.1 per cent against your PAN and shows in your annual tax statement and AIS. You claim it when filing your income tax return, as advance tax already paid. Reconcile it quarterly, because a mismatch between the operator’s return and your PAN records is far easier to fix in the same year than after assessment.

Q: Is stock sent to a fulfilment centre in another state a sale?

A: Not a sale, but it is a supply. Registrations in two states are distinct persons, so movement between them falls under Schedule I of the CGST Act. It needs a tax invoice and IGST, with credit taken at the receiving end. The overall tax effect is neutral if it is done properly and messy if it is skipped.

Q: How should returns be recorded for a marketplace seller?

A: A customer return reverses the sale and, with a credit note, the output GST. An RTO is not a return of a sale, because the supply never happened, so it is a distribution cost. Saleable goods go back into stock at cost, damaged goods are written down, and platform reimbursements are income.

Q: Can I use presumptive taxation as an online seller?

A: Possibly. Presumptive taxation for eligible resident businesses sits at Section 58 of the Income-tax Act, 2025, with the familiar limits of ₹2 crore, extended to ₹3 crore where cash receipts and payments each stay within 5 per cent of the total. Marketplace receipts arrive through banking channels, which usually helps, but the scheme has entry, exit and lock-in consequences. Take advice before opting in.

Q: Which accounting software works for marketplace sellers?

A: Any ledger that handles multi-state GST properly. The real differentiator is not the software but whether someone maps settlement data into it every month. We work in Zoho Books, Tally and QuickBooks depending on what suits the stock model, and compare them in our Tally vs Zoho Books vs QuickBooks guide.

Choosing between packages first? We have compared them on the points that actually differ in Tally vs Zoho Books vs QuickBooks.

Rates, thresholds and section references stated as at 27 August 2026. Platform fee names and rates change frequently; check your current rate card.

Get your marketplace accounts reconciled. Send us one month of settlement reports and we will tell you what your actual contribution margin is.