Generally, yes. A regular GST-registered seller can claim input tax credit on GST charged in marketplace commission, fixed fee, shipping fee and similar service invoices, if the invoice is valid, issued against the seller's own GSTIN, the service is used for taxable sales, and the credit appears in GSTR-2B. Composition dealers cannot claim. Confirm current rules with your tax adviser.
Why marketplace fee invoices can carry ITC
When you sell through a marketplace, the platform is your service provider for things like commission, fixed or closing fees, collection fees, shipping or logistics fees, and advertising. It charges GST on these services and issues tax invoices to you. That GST is an input tax for your business.
Because these services are used to make taxable outward supplies of your goods, the GST on them is generally eligible as input tax credit under the CGST Act, subject to the conditions below. The rate of GST on each fee is shown on the invoice. Always take it from the invoice and your agreement, not from memory, as rates and notifications change.
Conditions you must meet to claim the credit
The core conditions sit in Section 16 of the CGST Act and related rules. In practice, check the following for every fee invoice:
- You are a regular taxpayer. Composition dealers cannot claim ITC.
- A valid tax invoice or debit note exists with your correct GSTIN, the marketplace's GSTIN, description of service and GST amount.
- The service is received and used for business, specifically for taxable supplies. If you also make exempt supplies, proportionate reversal rules may apply.
- The marketplace has reported the invoice and paid the tax, so the credit appears in your GSTR-2B.
- You have filed your return within the time limit for claiming credit.
- The credit is not blocked under Section 17(5).
Time limits and payment-related conditions are updated from time to time. Confirm the latest position with your tax adviser or the GST portal before relying on any of them.
Where sellers lose or delay credit
Eligibility is rarely the issue. Execution is. These are the usual leaks:
- Wrong GSTIN on the invoice. Sellers registered in several states may find fees billed under a different GSTIN from the one that made the sale. Credit then sits in the wrong registration.
- Invoice not in GSTR-2B. If the marketplace files late or misreports, your credit does not show up. Do not claim it blindly.
- Credit notes ignored. Fee reversals, waivers or corrections reduce your eligible credit. If you claim the original invoice and miss the credit note, you over-claim.
- Invoice totals not tied to settlements. Fees deducted in settlement reports may differ from invoiced amounts because of timing, adjustments or disputes.
- Mixing invoices from many services. Ads, logistics and commission can be billed separately, sometimes on different cycles.
ITC, TCS and TDS are different things
Marketplace sellers often confuse these. They are separate and sit in different places in your books.
| Item | What it is | Where it appears |
|---|---|---|
| ITC on fee invoices | GST you paid on services bought from the marketplace | GSTR-2B, then claimed in GSTR-3B |
| GST TCS | Tax collected by the marketplace on your net taxable supplies, as per the GST law | Your GST portal credit and electronic cash ledger |
| Income tax TDS | Tax deducted at source on payments to you, as per the Income Tax Act | Form 26AS or AIS, and TDS certificates |
Check the applicable TCS and TDS rates and thresholds in the law, your agreement and your settlement report, and confirm the latest position with your tax adviser. Do not net them against fee ITC in your working.
How to reconcile fee invoices before claiming
A simple monthly flow keeps claims clean:
- Download all fee invoices and credit notes from the seller portal for the period.
- Match them to the marketplace entries in GSTR-2B by GSTIN, invoice number, taxable value and GST.
- Match invoiced fees to the deductions in your settlement reports.
- Check the fees against your agreed commission slabs and rate card. Overcharges mean you pay GST on a fee that should not have been billed.
- Raise a dispute for any mismatch and track it to closure.
This is the kind of check MarketplaceMetrics by Fundle is built around: reconciling sales and settlements, checking commissions and fees against agreed terms, and tracking returns and recovery cases. Currently, Myntra Excel reports are reviewed, and other marketplaces are in scope discussion.
Month-end checklist
- All fee invoices for the month downloaded and filed by GSTIN.
- Credit notes and debit notes captured.
- GSTR-2B matched; unmatched items parked, not claimed.
- Fees tied to settlement deductions, with differences explained.
- Commission and fee rates checked against the agreement.
- TCS credit and TDS entries reviewed separately.
- Open disputes and recoveries listed with owners and dates.
Worked example
Illustrative example only. Figures are made up to show the method. Use the GST rate shown on your actual invoices.
| Line | Taxable value (₹) | GST on invoice (₹) |
|---|---|---|
| Commission invoices | 60,000 | 10,800 |
| Fixed and collection fee invoices | 15,000 | 2,700 |
| Shipping fee invoices | 25,000 | 4,500 |
| Total invoiced | 1,00,000 | 18,000 |
| Less: credit note for fee reversal | 5,000 | (900) |
| Net GST on fees | 95,000 | 17,100 |
Suppose GSTR-2B shows only ₹16,200 for this marketplace because one shipping invoice of ₹900 GST has not been reported. The safe claim for the month is ₹16,200. The ₹900 gap is followed up with the marketplace and claimed once it appears, within the permitted time. Separately, if the commission was billed above the agreed slab, the excess fee and its GST become a dispute item.
Questions and answers
Can a composition dealer claim ITC on marketplace commission invoices?
No. A taxpayer under the composition scheme cannot claim input tax credit on purchases, including marketplace commission and fee invoices. The GST paid becomes part of your cost. Check your registration type and the latest rules with your tax adviser.
Do I need the invoice in GSTR-2B before claiming ITC?
As a rule, yes. The GST law ties eligible credit to what is reflected in your GSTR-2B, which depends on the marketplace filing its returns. If an invoice is missing, follow up with the marketplace and claim after it appears, within the time limit.
Is GST TCS deducted by the marketplace the same as ITC?
No. TCS is tax collected on your supplies and shows as credit in your GST electronic cash ledger. ITC is GST you paid on inputs and services such as commission. They are tracked, claimed and used differently, so keep them separate in your books.
What if the marketplace invoices my fees under the wrong GSTIN?
Ask the marketplace to correct the GSTIN through a credit note and a fresh invoice where applicable. Credit generally cannot be claimed on an invoice issued to a different GSTIN. Raise it early, keep the correspondence, and confirm treatment with your tax adviser.