For most marketplace sales of goods, revenue is recognised when control passes to the customer, which in practice is usually on delivery rather than dispatch. Dispatch works only if your terms and facts show control has already transferred. The right point depends on your contract, who bears transit risk and the applicable standard (Ind AS 115 or AS 9). Confirm your policy with your chartered accountant.
Why the timing question matters
A marketplace order passes through several dates: order, dispatch, delivery, possible return, and finally settlement. Each date can show up in a different report, and each can be mistaken for the date of sale.
Choosing the wrong one distorts your numbers in three ways:
- Cut-off errors: goods in transit at month-end are counted in the wrong period.
- Margin swings: revenue and the related cost of goods sold fall in different months.
- Reconciliation noise: your books never quite tie to marketplace reports, so genuine differences get buried.
What the accounting standards ask
The principle is about transfer, not paperwork. Entities following Ind AS apply Ind AS 115, which recognises revenue when control of the goods passes to the customer. Entities following the older Accounting Standards look at AS 9, which focuses on the transfer of significant risks and rewards of ownership. Which framework applies to you depends on your company's status, so confirm it with your chartered accountant.
Both lead to the same practical questions:
- Who bears the risk of loss or damage while the parcel is in transit?
- When does the customer obtain the right to use the goods or reject them?
- Do your seller agreement and marketplace terms say when title passes?
Note that GST time of supply is a separate rule from accounting revenue recognition. Do not assume the two dates match; check with your tax adviser.
Dispatch vs delivery: how to decide
For most Indian brands selling consumer goods through marketplaces, delivery is the safer and more commonly defensible point, because the customer receives the goods and can usually return them. Dispatch can be argued only where the facts clearly support it.
| Question | Points to dispatch | Points to delivery |
|---|---|---|
| Transit risk | Passes to buyer at handover to courier | Stays with you until the customer receives |
| Title and terms | Agreement says title passes on dispatch | Title passes on delivery or is silent |
| Delivery failures | Rare and not your risk | RTOs and non-deliveries are common |
| Evidence available | Manifest or handover scan only | Delivered status and date in reports |
Whichever you pick, document it as a policy, apply it consistently across channels and review it when marketplace terms change.
Returns, RTOs and refunds
Returns are where the timing choice bites. If you recognise on dispatch, you will book revenue on orders that later come back as RTOs, so you need reversals. If you recognise on delivery, RTOs never reach revenue, but customer returns after delivery still do.
- RTO and undelivered parcels: not a sale under a delivery policy; the stock goes back into inventory.
- Customer returns: estimate expected returns from your own history and record a provision or refund liability, as your accountant advises.
- Marketplace charges: commissions, fixed fees and shipping fees are normally expenses linked to the sale. Check how your settlement report labels them and what your agreed rate card says.
Mapping marketplace dates to your books
Settlement is cash, not revenue. A payout can arrive days or weeks after delivery, and it is net of deductions, so it will rarely equal your sales figure.
Pull these dates for every order where the reports provide them:
- Order date and dispatch date
- Delivery date (or RTO date)
- Return request and return received dates
- Settlement date and the deductions applied
Column names and available data differ by marketplace and report, so check the latest report format for each channel before building your mapping.
A month-end checklist
- Fix and document your recognition policy with your accountant.
- List orders dispatched but not delivered at month-end and carry them as goods in transit.
- Move orders delivered after month-end into the next period.
- Update the returns provision using your recent return rates.
- Match settlements to orders and flag unexplained deductions. A tool such as MarketplaceMetrics by Fundle can reconcile sales and settlements and check fees against agreed terms, which saves manual spreadsheet matching.
- Record the unresolved differences and follow them up as recovery cases.
Worked example
Illustrative example only; all figures are assumed and net of GST for simplicity.
A brand dispatches 40 orders of ₹1,500 each between 29 and 31 March. All are delivered on 2 and 3 April.
| Policy | March revenue | April revenue |
|---|---|---|
| Recognise on dispatch | ₹60,000 | ₹0 |
| Recognise on delivery | ₹0 | ₹60,000 |
Under the delivery policy, the stock for these orders stays as goods in transit at 31 March. If the brand assumes, from its own history, that 8% of delivered value will be returned (an assumed rate), it sets aside ₹4,800 (₹60,000 × 8%) against April revenue. The settlement may arrive in April or later, and it will be net of marketplace deductions, so it will not equal ₹60,000.
Questions and answers
Can I recognise marketplace revenue on dispatch in India?
Only if your terms and facts show control, or risks and rewards, passed to the customer at dispatch. For most brands, transit risk and return rights make delivery safer. Agree the policy with your chartered accountant and apply it consistently.
Is revenue recognised when the marketplace pays me?
No. Settlement is a cash event that arrives after delivery and is net of commissions, fees and adjustments. Revenue follows your recognition policy, while the payout should be reconciled against it to explain every difference.
How should RTO orders be treated?
Under a delivery-based policy, an RTO never becomes revenue and the stock returns to inventory. Under a dispatch-based policy, you must reverse the revenue. Either way, track RTOs separately from customer returns, since the causes and costs differ.
Does GST time of supply decide revenue recognition?
No. GST time of supply and accounting revenue recognition are separate rules, and their dates can differ. Follow the GST law and your tax adviser for tax, and the applicable accounting standard for your books. Confirm the latest rules.