At a glance
| Parameter | Detail |
|---|---|
| What a payout is | A net cash movement, not a revenue figure |
| What sits inside it | Gross sales, returns, commission, fulfilment, shipping, advertising, TCS, TDS |
| GST TCS | 0.5 per cent of net taxable supplies under Section 52 |
| Income-tax TDS | 0.1 per cent of gross sales under Section 194-O |
| Frequency | Weekly or fortnightly on most marketplaces, more often on quick commerce |
| Reconciles to | The bank, the GST returns and Form 26AS |
| Consequence of skipping | Understated turnover and an unreconcilable annual return |
The arithmetic that most sellers get wrong
Take a month with Rs 10,00,000 of gross orders despatched on one marketplace. Roughly Rs 1,20,000 comes back as returns. The platform charges commission, fulfilment and shipping, deducts advertising already run, collects tax at source under GST, and deducts income tax at source. What arrives in the bank might be Rs 6,80,000.
A seller who books Rs 6,80,000 as sales has understated turnover by more than three lakh rupees, claimed no input tax credit on the platform's fees, and left both taxes sitting unrecovered. Repeat that for twelve months and the annual return cannot be reconciled to anything.
What each line actually is
| Settlement line | Accounting treatment |
|---|---|
| Gross sales despatched | Revenue, recognised in full at the point of supply |
| Returns and cancellations | Reversal of revenue, and a reduction in the TCS base for the month |
| Commission | Expense, with input tax credit on the GST charged |
| Fulfilment and shipping fees | Expense, with input tax credit |
| Advertising | Expense, with input tax credit |
| Section 52 TCS | An asset. Recoverable through the electronic cash ledger |
| Section 194-O TDS | An income-tax credit. Visible in Form 26AS |
| Net remittance | A cash movement only |
A workable monthly method
Download the settlement report, the tax report and the returns report from each channel for the full period, not just the payout summary.
Recognise gross sales from despatch data, then post returns separately in the month they occur.
Post each fee category to its own expense head, so input tax credit can be claimed and margin can be measured by fee type.
Post TCS and TDS to two separate asset accounts. Never to expense, and never to a single combined head.
Tie the computed net to the actual bank receipt. A difference means something has been missed, and the difference is the whole point of the exercise.
Only then prepare the GST returns, because a return built on an unreconciled position simply moves the problem forward.
Why the bank tie-out matters more than it looks
The tie-out is the control that makes the rest trustworthy. If gross sales less every deduction equals the bank receipt to the rupee, the revenue figure, the expense figures and both tax assets are all internally consistent.
When it does not tie, the usual causes are returns from an earlier period adjusted in this one, reimbursements for lost or damaged stock, promotional funding credited by the platform, or a fee category nobody has mapped yet. Each of those is a real accounting event that belongs somewhere in the books.
Can I just use the platform's summary report as my P&L?
No. Platform summaries are built for seller convenience, not for statutory accounts. They frequently net returns against sales, present fees in categories that do not map to expense heads, and show tax deductions without distinguishing GST from income tax. They are an input to the reconciliation, not a substitute for it.
How often should reconciliation be done?
Monthly at a minimum, aligned to the GST return cycle, because the GSTR-1 and GSTR-3B positions depend on it. Sellers on quick commerce platforms with very frequent settlements often find a fortnightly rhythm easier, since the volume of individual settlements makes a monthly catch-up unwieldy.
What if my books are already a year behind?
Treat the clean-up as a separate exercise before starting a monthly rhythm, because a monthly cycle built on wrong opening balances is not worth having. Rebuild each month from the settlement files, correct the GST positions where they can still be corrected, and only then move to a forward-looking cycle.
Does this change if I sell on my own website too?
The principle is the same but the mechanics are simpler, because a payment gateway deducts a fee and remits, without collecting TCS under Section 52 or deducting TDS under Section 194-O in the way a marketplace operator does. Own-website revenue should still be tracked as a separate channel for margin purposes.
Which accounting software handles this well?
Any ledger can hold the result, but the reconstruction usually happens outside the ledger first. We most often deploy Zoho Books for multi-channel sellers because of its channel tagging, with the settlement rebuild done in a controlled worksheet and posted as a structured journal each period.
About the author
CA & CS Team
Regikart at Regikart. Want to discuss this in the context of your business?