At a glance
| Parameter | Detail |
|---|---|
| Commission | Percentage of sale value, category-dependent |
| Closing or fixed fee | Flat charge per order in many categories |
| Fulfilment fee | Charged where the platform picks, packs and ships |
| Shipping or weight handling | Driven by weight and distance zone |
| Storage fee | Charged on stock held at fulfilment centres, often rising with age |
| Advertising | Sponsored listings and promotions |
| Input tax credit | Available on the GST charged on these fees, if booked correctly |
Why one lump sum is expensive
Booking every platform deduction to a single expense head has two costs. The first is tax: input tax credit on marketplace fees is a real recovery, and a credit not identified is a credit not claimed.
The second is managerial. Fee structures behave very differently. Commission scales with price, fixed fees scale with order count, shipping scales with weight, and storage scales with how long stock sits. A seller who cannot see which of these is eating margin cannot fix it, because the corrective action is different in each case.
The behaviour of each fee
| Fee | Scales with | What to do when it is high |
|---|---|---|
| Commission | Sale value | Review category placement and pricing, since commission is category-driven |
| Fixed or closing fee | Number of orders | Look at average order value. Low-value orders carry this fee disproportionately |
| Fulfilment | Order count and size | Compare platform fulfilment against self-fulfilment for your mix |
| Shipping | Weight and zone | Review packaging weight and dimensions. Small changes move fee slabs |
| Storage | Stock volume and ageing | Attack slow-moving stock. Storage cost usually escalates with age |
| Advertising | Discretionary spend | Measure against incremental contribution, not against gross sales |
Input tax credit hygiene
Book each fee category to its own expense head with the GST component identified separately.
Match the platform's tax invoice for fees against the settlement deduction, since the two do not always agree in timing.
Confirm the fees invoice carries your correct GSTIN, because credit follows the GSTIN on the document.
Reconcile the credit claimed against GSTR-2B, and follow up where a platform's invoice has not been reported.
Keep advertising invoices separate from fulfilment invoices, because they are commonly issued by different entities within the same group.
The margin view this unlocks
Once fees sit in their own heads, contribution margin by channel becomes computable: gross sales, less returns, less cost of goods sold, less each fee category, less logistics, less advertising.
That figure is what tells you whether a channel deserves more inventory or less. Sellers seeing it for the first time frequently find that their highest-revenue channel is not their most profitable one, and that a share of their catalogue is contributing negatively once storage and returns are attributed properly.
Can I claim input tax credit on marketplace commission?
Yes, on the GST charged on commission and other platform fees used for business purposes, provided the fee invoice carries your correct GSTIN and the supplier has reported it. This is a routine recovery that is lost whenever fees are booked as a single net deduction rather than as identified expenses.
Why does the fee invoice not match the settlement deduction?
Timing is the usual reason, since deductions are applied against settlements while tax invoices for fees follow their own cycle. Reconcile the two monthly rather than assuming a difference is an error, and investigate only the residual that does not clear in the following period.
Which fee usually surprises sellers most?
Storage, because it accrues quietly on stock that is not selling and typically escalates the longer inventory sits. A seller focused on commission percentages often finds that ageing stock at a fulfilment centre has been steadily consuming margin without appearing in any headline fee rate.
Should advertising be treated as cost of sales or overhead?
For margin analysis it belongs against the channel and, where possible, against the product it promoted, because advertising in marketplace selling is much closer to a direct selling cost than a general overhead. In the statutory P&L it remains an operating expense.
Do quick commerce platforms use the same fee structure?
The categories are broadly similar but the weights differ, with more frequent settlements, different fulfilment economics and different return behaviour. Map each platform's fee schedule to your own expense heads separately rather than assuming a marketplace structure carries across. Settlement frequency alone changes the reconciliation rhythm, so treat quick commerce as its own channel rather than folding it into marketplace reporting.
About the author
CA & CS Team
Regikart at Regikart. Want to discuss this in the context of your business?