Book the sale gross: debit Marketplace Receivable, credit Sales and Output GST. Then debit Sales Returns, Commission, Fees, Input GST, TCS and TDS receivable against that same receivable as they appear in the settlement report. When the money arrives, debit Bank and credit Marketplace Receivable. The closing balance should equal unsettled orders only.
Set up the ledgers before you post anything
Most marketplace books go wrong because every rupee is posted when it reaches the bank. That hides returns, fee deductions and unsettled orders. Create a small set of ledgers first, one set per marketplace where possible:
- Marketplace Receivable: a clearing account that holds what the marketplace owes you.
- Sales - Marketplace and Sales Returns.
- Output GST and Input GST on marketplace fees.
- Commission expense, plus separate heads for shipping or fulfilment fees, fixed or closing fees, and payment or collection fees.
- TCS receivable (GST) and TDS receivable.
- Marketplace recoveries and penalties, and Bank.
Fee names differ across marketplaces. Take the exact heads from your seller agreement, the rate card and the settlement report, rather than from memory.
Entry 1: Record the sale at gross value
Recognise revenue as per your accounting policy, usually when control passes to the customer on dispatch or delivery. Confirm the exact trigger with your chartered accountant, because it affects cut-off at month-end.
Dr Marketplace Receivable (invoice value)
Cr Sales - Marketplace (taxable value)
Cr Output GST (tax on the invoice)
Book the full amount the customer is invoiced, not the net amount you expect to receive. Booking net settlements as sales understates revenue and hides the cost of selling on the marketplace.
Entry 2: Returns, commission and fees
Returns and fees are not bank movements. They reduce what the marketplace owes you, so post them against the receivable.
Customer return (with credit note):
Dr Sales Returns
Dr Output GST (reversal)
Cr Marketplace Receivable
Commission and fees:
Dr Commission expense / Fee expense heads
Dr Input GST on marketplace fees
Cr Marketplace Receivable
Use the marketplace's tax invoice or fee statement as the source for amounts and GST. Whether input credit is available on a particular fee is a question for your tax adviser. Do not combine all fees into one line, because you cannot check a single number against a rate card.
Entry 3: TCS, TDS and the settlement receipt
Marketplaces may deduct tax at source before paying you. Applicability and rates depend on current law and your status, so check the latest provisions (GST law on TCS by e-commerce operators, and the Income-tax Act on TDS by e-commerce operators) with your tax adviser. Then match the deductions in the settlement report with what shows on the GST portal and in Form 26AS or AIS.
TCS and TDS deducted:
Dr TCS receivable (GST)
Dr TDS receivable
Cr Marketplace Receivable
Settlement received in bank:
Dr Bank
Cr Marketplace Receivable
Post the bank entry for the actual amount credited, referencing the settlement or payment ID so it can be traced later.
Month-end: reconcile the receivable
After posting, the Marketplace Receivable balance should equal only orders that are genuinely unsettled. If it does not, work through this list:
- Export the settlement report and sales report for the same period.
- Match each settlement line to an order and its invoice.
- Compare commission and fees with the agreed rate card and flag differences.
- Check that every return in the report has a credit note and a matching entry.
- List unsettled orders and their ageing. Raise a query with the marketplace on old items.
- Move disputed deductions to a separate recoverable list rather than writing them off.
Doing this by hand across thousands of orders is slow. MarketplaceMetrics by Fundle reconciles marketplace sales and settlements, checks fees against agreed terms and tracks returns and recovery cases, so your team works on exceptions only.
Common mistakes to avoid
- Posting only bank receipts as sales. Revenue, GST and expenses all end up wrong.
- Netting commission against sales. You lose visibility of selling cost per marketplace.
- Ignoring return timing. A return after month-end can leave the receivable overstated.
- Not testing fees against the rate card. Wrong charges go unnoticed and recovery windows pass.
- Writing off short payments. Keep them as open recovery cases until the marketplace confirms or reverses them.
Worked example
Illustrative example only. All figures and tax amounts below are assumed for demonstration. They are not rates or guidance. Assume one month, one marketplace, all orders settled.
| Event | Debit | Credit |
|---|---|---|
| Sales: taxable ₹1,00,000, GST ₹5,000 | Marketplace Receivable ₹1,05,000 | Sales ₹1,00,000; Output GST ₹5,000 |
| Returns: taxable ₹10,000, GST ₹500 | Sales Returns ₹10,000; Output GST ₹500 | Marketplace Receivable ₹10,500 |
| Commission and fees: ₹15,000 plus GST ₹2,700 | Commission and Fee expenses ₹15,000; Input GST ₹2,700 | Marketplace Receivable ₹17,700 |
| TCS ₹500 and TDS ₹400 deducted | TCS receivable ₹500; TDS receivable ₹400 | Marketplace Receivable ₹900 |
| Settlement received | Bank ₹75,900 | Marketplace Receivable ₹75,900 |
Check: ₹1,05,000 - ₹10,500 - ₹17,700 - ₹900 = ₹75,900, so the receivable closes at nil. If the bank received less than this, the gap is an unexplained deduction or a pending settlement to investigate.
Questions and answers
Should I book marketplace sales at gross or net of commission?
Book sales at the invoice value to the customer, and book commission and fees as separate expenses. Netting hides your true selling cost and complicates GST. Confirm presentation and revenue recognition policy with your chartered accountant, especially if your agreement has any unusual structure.
Do I need a separate receivable ledger for each marketplace?
Yes, it is the practical approach. Separate ledgers show what each marketplace owes you, make reconciliation against its settlement report straightforward, and help you spot delayed payments or unexplained deductions without sifting through a combined balance.
How do I find the correct commission and fee rates to check against?
Use your signed seller agreement and the current rate card on the marketplace seller portal. Rates and fee heads change, so confirm the latest version applicable to your category and date of sale, and compare it with the charges in each settlement report.
How should I treat TCS and TDS deducted by the marketplace?
Treat them as tax receivable, not expenses, and credit the marketplace receivable. Confirm applicability and rates with your tax adviser, then match the amounts to the settlement report, GST portal records and Form 26AS or AIS before claiming credit.