GST charged by a marketplace on commission and fees is an input tax for your business. You can generally claim it as input tax credit if you hold a valid tax invoice in your GSTIN's name, the invoice shows in GSTR-2B, the service is used for taxable business supplies, and you claim within the statutory time limit. Confirm rates and conditions with your tax adviser.
How GST applies to marketplace commission and fees
When a marketplace charges you commission, fixed fees, shipping or collection fees, it is supplying services to you. It should charge GST on them and issue a tax invoice to your GSTIN. For your business, that GST is an input tax. If you sell taxable goods, it can generally be set off against your output GST, subject to the conditions in the GST law.
The fee heads and the GST rate differ by marketplace and by your agreement. Do not rely on a blog for the rate. Read it from the tax invoice, your seller agreement and the platform's rate card, and confirm the current position with your tax adviser.
Conditions for claiming input tax credit
Section 16 of the CGST Act sets the conditions for ITC. In practice, for marketplace fees, check the following:
- You hold a valid tax invoice or debit note issued to your GSTIN.
- The invoice is reflected in your GSTR-2B, which means the marketplace has reported it in its return.
- The service is used for your business, and your outward supplies are taxable. If you also make exempt supplies, reversal rules may apply.
- The credit is not in the blocked credit list.
- You claim within the time limit prescribed in the law. Confirm the current deadline with your tax adviser.
Documents to match before you claim
ITC on marketplace fees involves four or five documents. Each answers a different question.
| Document | What it tells you | What to check |
|---|---|---|
| Marketplace tax invoice | Taxable value and GST charged | Your GSTIN, correct state, fee heads, invoice number |
| GSTR-2B | Credit available to you for the period | Every invoice you expect is present |
| Settlement report | Fees and GST actually deducted from payouts | Deductions equal invoice totals |
| Seller agreement and rate card | Fees you agreed to pay | Fee heads and rates match what was billed |
| Credit notes | Reversals or corrections of fees | Credit reflected in settlement and in your records |
Common reasons ITC goes missing or does not match
- Wrong GSTIN or state: if you have registrations in more than one state, the invoice may be raised on the wrong one.
- Not in GSTR-2B: the marketplace may have filed late or not reported the invoice.
- Deduction without an invoice: fees appear in the settlement report but no matching invoice has been issued yet.
- Credit notes not reflected: a fee was reversed in settlement, but your books still carry the original amount.
- Fee not in the agreement: a charge appears that is not in your rate card, so both the cost and the GST on it are questionable.
- Timing differences: fees are deducted in one month and invoiced in another.
TCS is not the same as input tax credit
Marketplaces that act as e-commerce operators also collect TCS under Section 52 on your net taxable supplies. This is tax collected on your sales, not GST on a service you bought. It is reported separately and is credited to your electronic cash ledger, not your ITC ledger. Keep the two apart in your books. Check the current TCS rate and the claim process on the GST portal or with your tax adviser.
A monthly routine for sellers
- Download the marketplace's tax invoices and credit notes for the month.
- Total the fees and GST on them and compare with the deductions in the settlement report.
- Tick off each invoice against GSTR-2B once it is available.
- Raise missing or mismatched invoices with the marketplace, quoting invoice numbers and settlement references.
- Check billed fee heads and rates against your agreement and rate card.
- Record the ITC you claim and the open items you are chasing.
Doing this by hand across thousands of orders is slow. MarketplaceMetrics by Fundle reconciles marketplace sales and settlements and checks commissions and fees against agreed terms, so mismatches are visible before you file. Myntra Excel reports are reviewed today, and other marketplaces are in scope discussion.
Worked example
Illustrative example only. All figures are made up. Use the rates and amounts on your own invoices.
| Invoice | Taxable value (₹) | GST on invoice (₹) | In GSTR-2B? |
|---|---|---|---|
| A: Commission | 50,000 | 9,000 | Yes |
| B: Shipping fee | 12,000 | 2,160 | No |
| C: Other fees | 8,000 | 1,440 | Yes |
| Total | 70,000 | 12,600 |
The settlement report shows total fee deductions of ₹82,600 (₹70,000 plus ₹12,600 GST), which agrees with the three invoices. But GSTR-2B shows only ₹10,440 of credit (₹9,000 plus ₹1,440). The ₹2,160 gap is Invoice B. You would not claim it until it appears. Instead, raise it with the marketplace with the invoice number and settlement reference, and ask your tax adviser how to treat it meanwhile.
Questions and answers
Can I claim input tax credit on marketplace commission?
Generally yes, if you make taxable supplies, hold a valid tax invoice in your GSTIN's name, the invoice appears in GSTR-2B, and the other Section 16 conditions are met. If you also make exempt supplies, reversal rules may apply. Confirm your position with your tax adviser.
What if the marketplace invoice is missing from GSTR-2B?
Do not claim it on assumption. Check that the invoice carries your correct GSTIN and that the period is right. Then raise it with the marketplace, quoting the invoice number and settlement reference, and ask your tax adviser how to treat it until it appears.
Is TCS deducted by a marketplace the same as ITC?
No. TCS is tax collected on your net taxable sales through the platform, and it is credited to your electronic cash ledger. ITC is GST you paid on purchases, including marketplace fees. Keep them separate in your books and confirm the current TCS rate and process.
Should GST in my settlement deductions match the invoice?
It should, over the same period. Differences usually come from timing, credit notes or fee heads not billed yet. Compare monthly settlement deductions with invoice totals, and investigate any gap before you file your return.