GST on Marketplace Fees: What Sellers Must Check

What GST on marketplace fees actually covers

When you sell through a marketplace, two separate supplies take place. You supply goods to the customer, and the marketplace supplies services to you. Commission, fixed fee, shipping or logistics fee, and similar charges fall in the second group. GST on these charges is levied on the fee amount, not on the selling price of your product.

This is why your settlement report shows deductions that are higher than the headline commission percentage. The tax on the fee is added on top. Your seller agreement and rate card tell you the fee; the marketplace's tax invoice tells you the GST charged on it.

We do not quote a rate here because rates and classifications can change. Always confirm the latest position in your invoice, the marketplace's seller terms and with your tax adviser.

Commission, fixed fee and shipping fee: what to check on each

Each charge has its own basis, so check each one separately.

• Commission: usually a percentage of a base value. Check from your agreement whether the base is the selling price, the price net of discounts, or something else, and whether it varies by category.
• Fixed fee: a flat amount per order or per item, often linked to a price band. Check that the band applied to an order matches the rate card.
• Shipping fee: often depends on weight, size, zone or the fulfilment model. Check the weight slab used against your product master data, because a wrong weight is a common source of overcharging.

For all three, the GST shown should be calculated on the fee amount and displayed on the invoice with the correct tax split (IGST or CGST and SGST), depending on the places of supply and registration involved.

Input tax credit: what sellers need to verify

GST charged on marketplace fees is generally a business input cost. Whether you can claim input tax credit depends on your registration, the conditions in the GST law and your own circumstances, so confirm eligibility with your tax adviser.

Practical checks before you claim:

1. The invoice carries your correct GSTIN and the marketplace's GSTIN.
2. The invoice appears in your GSTR-2B for the relevant period.
3. The tax amount on the invoice matches the tax implied by the deductions in your settlement.
4. Credit notes issued for fee reversals are accounted for, so you do not claim credit on a charge that was later reversed.

If an invoice is missing from your GSTR-2B, raise it with the marketplace's seller support rather than waiting until the return deadline.

Do not confuse GST on fees with TCS and TDS

Settlement reports often show several deductions together, and they are not the same thing.

• GST on fees: tax charged by the marketplace on its services to you. It is on the fee invoice.
• TCS under GST: tax collected by the e-commerce operator on the net value of taxable supplies you make through it. It is reported in the return filings and credited to your ledger, subject to the rules.
• TDS under the Income-tax Act: tax deducted by the marketplace on payments to sellers, where applicable. It is reflected in your tax credit statements.

Each has its own rate and treatment. Take the rate from the current law, your settlement report and your tax adviser, and keep the three in separate columns in your books.

How to reconcile fee GST with your settlement report

Settlement reports show deductions order by order, while invoices are often issued for a period. Reconciliation means tying the two together.

1. Export order-level settlement data for the month.
2. Split deductions into commission, fixed fee, shipping fee, other fees and tax.
3. Recompute each fee from your agreed terms and the order's attributes (price, category, weight).
4. Compare the total fee and GST with the marketplace invoice and credit notes.
5. List differences with order IDs and raise them as claims within the marketplace's dispute window.

Doing this in spreadsheets works for a few hundred orders but becomes heavy at scale. MarketplaceMetrics by Fundle reconciles marketplace sales and settlements and checks commissions and fees against agreed terms. Myntra Excel reports are reviewed today, and other marketplaces are in scope discussion.

Common mismatches and what usually causes them

• Fee charged on the wrong base: for example on the pre-discount price when your agreement says otherwise.
• Wrong weight slab: the marketplace's measured weight differs from your catalogue weight.
• Fee not reversed on returns: check your agreement for which fees are refundable on returns or cancellations.
• Tax split mismatch: IGST on the invoice where you expected CGST and SGST, or the reverse. Verify the registration details on both sides.
• Invoice and settlement timing gaps: a deduction in one month and an invoice in the next, which makes monthly totals disagree.

Keep a recovery log with the order ID, expected fee, charged fee, difference and claim status, so nothing ages out of the dispute window.