How to Create a Marketplace Clearing Account in Tally

What a marketplace clearing account does

Marketplaces do not pay you invoice by invoice. They pay a net amount after adjusting returns, commission, fees, shipping charges and tax deductions. If you book the bank receipt directly against sales, you lose the link between what was sold and what was paid.

A clearing account sits in between. Everything the marketplace owes you goes in as a debit. Everything it deducts goes in as a credit. The bank receipt then settles the balance. What remains is your unsettled amount.

• One ledger per marketplace keeps balances separate (for example Myntra, Amazon, Flipkart).
• It works like a party ledger, but the entries are summarised from settlement data, not typed customer by customer.
• Your chartered accountant may prefer it under Sundry Debtors or under Current Assets. Confirm the treatment before you start.

Set up the ledgers in Tally Prime

Create the structure once, then reuse it every month. Go to Gateway of Tally, then Create, then Ledger.

1. Clearing ledger: create a ledger named, say, Myntra Clearing. Choose a parent group as agreed with your accountant, usually Current Assets or Sundry Debtors.
2. Sales ledgers: keep a marketplace-specific sales ledger so reports can be split by channel.
3. Returns ledger: create Sales Returns, or use credit notes against the sales ledger if that is your practice.
4. Expense ledgers: create separate ledgers for commission, fixed or closing fee, shipping or logistics fee, payment or collection fee, and any penalties or adjustments. Separate ledgers make later fee checks possible.
5. Tax receivable ledgers: create ledgers for tax collected or deducted by the marketplace that you can claim or adjust later, such as TCS and TDS receivable.
6. Bank ledger: use your existing bank account where settlements are credited.

If you enable bill-by-bill tracking on the clearing ledger, use a reference such as the settlement or payout ID. This helps when one payout covers many orders.

Record sales, returns, fees and settlements

The pattern is the same for every marketplace. Only the source report changes.

Post sales and returns from the sales and returns report, and fees and deductions from the settlement or payout report. Do not post from the bank statement alone, because it shows only the net figure.

Handle GST, TCS and TDS correctly

This is where entries go wrong most often. Tax treatment on commission, fees, TCS and TDS depends on your registration, the marketplace agreement and current law. Do not copy a rate or treatment from a blog post, including this one.

• Read the tax lines in your settlement report and fee invoices issued by the marketplace.
• Check your seller agreement or rate card for the fee structure you agreed.
• Confirm the latest GST, TCS and TDS treatment with your tax adviser or chartered accountant.
• Match the TCS and TDS amounts with what appears in your GST and income tax portals before you claim them.

Review and clear the balance every month

After posting a settlement, the clearing balance should relate only to orders not yet settled, such as recent deliveries or returns window orders. A balance that keeps growing signals a problem.

• Short payments: the bank amount is lower than the settlement report says.
• Missing orders: sales posted but never appearing in any settlement.
• Unexpected deductions: fees that differ from your agreed terms.
• Returns not credited: returned items where you have not received the refund adjustment.

Doing this in Excel works for a few hundred orders. At higher volumes, a tool such as MarketplaceMetrics by Fundle can reconcile sales and settlements, check fees against agreed terms and track recovery cases, so your Tally clearing balance is explained rather than just carried forward. Myntra Excel reports are reviewed today; other marketplaces are in scope discussion.

Common mistakes to avoid

• Booking the net settlement as sales, which understates turnover and hides fees.
• Using one ledger for all marketplaces, which makes reconciliation impossible.
• Lumping all fees into one expense ledger.
• Ignoring small differences that repeat every cycle.
• Closing the month without matching the clearing balance to pending orders.