Treat each marketplace as a party ledger under Sundry Debtors. Book gross sales to it, and book commission, fixed fees, shipping and other charges as separate Indirect Expense ledgers, with GST on fees in input tax ledgers. Record TCS and TDS as receivable credits, and the bank receipt against the party. When the party ledger nets to the pending settlement, your books are right.
Why the chart of accounts matters before you post a single entry
Marketplaces rarely pay you the sale value. A settlement is usually the sale value less commission, fees, shipping charges, taxes collected at source and adjustments for returns. If you post only the bank receipt, your sales are understated, your costs are invisible and the marketplace balance never clears.
A good chart of accounts in Tally answers three questions at month-end: how much did we sell, what did each type of fee cost us, and how much does the marketplace still owe us. Design the ledgers around those questions, not around the layout of any one settlement file.
Ledger structure to create in Tally
Create one set of ledgers per marketplace so that you can compare channels. A practical structure is below. Adapt the names to your own convention and confirm the grouping with your chartered accountant.
| Ledger | Tally group | Purpose |
|---|---|---|
| Marketplace name (party) | Sundry Debtors | Tracks what the marketplace owes you |
| Sales - Marketplace name | Sales Accounts | Gross sales by channel |
| Sales Returns - Marketplace name | Sales Accounts (or a contra under it) | Customer returns and cancellations after invoicing |
| Commission - Marketplace name | Indirect Expenses | Commission charged |
| Fixed or closing fee | Indirect Expenses | Per-order fees |
| Shipping and logistics fee | Indirect Expenses | Forward and reverse shipping charges |
| Payment or collection fee | Indirect Expenses | Collection charges, where billed separately |
| Advertising and promotions | Indirect Expenses | Sponsored listings and ad credits used |
| Penalties and chargebacks | Indirect Expenses | Deductions that are not routine fees |
| Input GST ledgers | Duties & Taxes | GST charged on fee invoices |
| TCS receivable | Current Assets | Tax collected at source by the marketplace |
| TDS receivable | Current Assets | Tax deducted at source by the marketplace |
Keeping fees as separate ledgers, rather than one lump called Marketplace Charges, lets you see which cost is growing and lets you check each against your agreed terms later.
How to book sales, fees and settlements
Use the party ledger as the clearing account. Everything the marketplace owes you goes to its debit; everything it deducts or pays goes to its credit. The balance is your receivable.
- Sales: post a sales voucher with the marketplace as the party and your Sales - Marketplace ledger, including GST on sales as per your invoicing process.
- Fees: post a journal or purchase-type voucher for the marketplace's fee invoice. Debit each fee ledger and the input GST ledgers, and credit the marketplace party.
- TCS and TDS: debit the receivable ledgers and credit the marketplace party for the amounts shown in the settlement or tax statements.
- Settlement receipt: post a receipt voucher, debiting the bank and crediting the marketplace party, for the amount actually received.
Use bill-by-bill tracking on the party ledger if you want to allocate receipts to settlement periods or reference numbers. It makes outstanding items easier to chase.
Handling GST, TCS and TDS on marketplace statements
Three different tax items often appear on one statement, and each is booked differently.
- GST on fees: the marketplace issues tax invoices for its services. Whether and how you claim input credit depends on your registration and the invoice details, so confirm with your tax adviser.
- TCS under GST: collected by the marketplace on net taxable supplies and reported against your GSTIN. It is not an expense; it is a credit you can see in your GST records. Match your ledger to the portal.
- TDS on payments: where deducted, it appears as a credit in your tax statements. Match your ledger to Form 26AS or the annual tax statement.
Do not quote rates from memory or from old blog posts. Check the current rate and applicability in your seller agreement, the marketplace's rate card, the settlement report and the latest notifications, and confirm with your tax adviser.
Returns, penalties and adjustments
Returns are where books and settlements drift apart. A returned order may reverse the sale, refund part of the fee, and add a reverse shipping charge in different settlement cycles.
- Post a credit note against the original sale when a return is confirmed, not when the refund reaches the customer.
- Book reverse shipping and return handling charges in their own fee ledger, so you can see the true cost of returns.
- Keep penalties, chargebacks and claims in a separate ledger. If a deduction looks wrong, you want it easy to find and dispute.
- Record recoveries, such as a reimbursement for a lost shipment, as a credit to the party ledger with a clear narration.
Monthly checks that keep the books honest
Once a month, take the party ledger closing balance and compare it with the marketplace's pending settlement or ledger statement. The difference should be explained by timing: orders delivered but not yet settled, or returns in transit. Anything else is an error, a missing entry or a wrong deduction.
Also compare each fee ledger with the fee invoices and with the commission and fee terms in your agreement. If you sell across many SKUs and cycles, doing this by hand in Excel gets slow; MarketplaceMetrics by Fundle reconciles sales and settlements, checks fees against agreed terms and tracks returns and recovery cases, so your Tally entries start from verified numbers.
Worked example
Illustrative example only. The figures below are made up to show the entries. GST on sales is ignored for simplicity, and the tax and fee amounts are not rates; take actual figures from your settlement report and invoices.
| Step | Debit | Credit |
|---|---|---|
| 1. Sale | Marketplace A: ₹2,000 | Sales - Marketplace A: ₹2,000 |
| 2. Fees (commission ₹300, fixed fee ₹30, shipping ₹100, GST on fees ₹80) | Commission ₹300; Fixed fee ₹30; Shipping fee ₹100; Input GST ₹80 | Marketplace A: ₹510 |
| 3. TCS ₹20 and TDS ₹10 shown on statement | TCS receivable ₹20; TDS receivable ₹10 | Marketplace A: ₹30 |
| 4. Settlement received | Bank: ₹1,460 | Marketplace A: ₹1,460 |
Check: ₹2,000 debit less ₹510, ₹30 and ₹1,460 in credits leaves the Marketplace A ledger at ₹0. If it does not clear, a deduction or a return is missing from your books.
Questions and answers
Should I book commission as an expense or net it from sales?
Book sales at the invoice value and commission as a separate expense. Netting hides your true sales and your channel cost. Separate ledgers also make it possible to check fees against your agreement and report gross margin by marketplace.
Do I need a separate Tally ledger for each marketplace fee?
It is not mandatory, but it is strongly advisable. Separate ledgers for commission, fixed fees, shipping, collection charges and penalties show which cost is rising and make disputes easier, because each deduction can be traced to a single ledger.
How do I treat TCS and TDS deducted by the marketplace?
Treat them as receivable credits, not expenses. Debit a TCS or TDS receivable ledger and credit the marketplace party. Then match the balances to your GST portal records and Form 26AS. Confirm applicability and rates with your tax adviser.
Why does my marketplace ledger never reach zero?
Common causes are timing differences, returns booked in a different period, missing fee invoices, unbooked penalties or settlement short-payments. Compare the party ledger with the marketplace's pending settlement statement, then trace each unmatched order or deduction.