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Accounting for E-Commerce Business Mumbai | N D Savla & Associates — CA Firm
Bookkeeping & Accounting

Accounting for E-Commerce Business
Marketplace Reconciliation, TCS Credit, GST & Financial Reporting

Expert e-commerce accounting in Mumbai — Amazon/Flipkart settlement reconciliation, TCS credit tracking, GST on e-commerce, inventory accounting, platform fee deductions, QuickBooks/Tally for online sellers. CA firm Andheri East.

Part of our practice: Outsourced Accounting Mumbai QuickBooks Accounting GST Return Filing Financial Reporting MIS

Overview

The Unique Accounting Challenges of E-Commerce

E-commerce has transformed retailing in India, and accounting for an e-commerce business has unique complexities that are simply not present in traditional brick-and-mortar retail. The e-commerce seller does not receive payment directly from the end customer at the point of sale — instead, the marketplace (Amazon, Flipkart, Myntra, Meesho, Nykaa, or any other platform) collects the payment, deducts its fees and commissions, withholds Tax Collected at Source (TCS) at 1% of the net value of taxable supplies, and remits the balance to the seller in periodic settlements. The settlement statement issued by the marketplace — which may be weekly or bi-weekly — is a complex document that combines sales, returns, marketplace fees, advertising charges, FBA (Fulfillment by Amazon) storage fees, and TCS deductions, and requires a specific reconciliation methodology to correctly record in the books. Beyond the settlement reconciliation, e-commerce sellers must handle GST compliance (which has specific provisions for marketplace sales), inventory accounting across potentially multiple fulfillment centres and warehouses, and return processing accounting.

N D Savla & Associates provides specialised accounting services for e-commerce businesses — whether you sell exclusively on one marketplace, across multiple platforms, through your own website (Shopify, WooCommerce, or a custom website), or through a combination of all channels. Our e-commerce accounting team understands the mechanics of marketplace settlement statements from Amazon, Flipkart, Meesho, Myntra, Nykaa, and other major platforms; the GST treatment of e-commerce supplies; the TCS framework and how to claim TCS credit in the GST annual return; and the inventory accounting requirements of businesses with fast-moving, diverse SKU portfolios across multiple locations.

01

Marketplace Settlement Reconciliation — The Core Challenge

The marketplace settlement statement is the central document in e-commerce accounting, and reconciling it correctly is both the most important and the most technically challenging aspect of maintaining accurate books for an online seller. A typical Amazon settlement statement for a week might show: gross sales (the full amount charged to customers); returns and refunds (amounts credited back to customers for returned orders); marketplace facilitation fees (Amazon's commission, typically 5-20% of the sale price depending on the product category); FBA fulfillment fees (per-unit fees for pick, pack, and ship); storage fees (for inventory held in Amazon's fulfillment centres beyond the free storage period); advertising charges (for sponsored product, sponsored brand, and other advertising campaigns); and TCS at 1% of net taxable supplies under Section 52 of the CGST Act. After all these deductions, the net settlement amount is credited to the seller's bank account. The accounting challenge is to correctly record each component — grossing up the sales to full invoice value, recording the fees as expenses in the appropriate category, separating the TCS as a recoverable asset, and reconciling the net settlement to the bank credit.
02

TCS Under Section 52 of the CGST Act — Tracking and Claiming Credit

Section 52 of the CGST Act requires every Electronic Commerce Operator (ECO) — which includes Amazon, Flipkart, Meesho, and all other marketplace operators — to collect Tax Collected at Source (TCS) from seller payments at 1% (0.5% CGST + 0.5% SGST, or 1% IGST for inter-state supplies) of the net value of taxable supplies made through the marketplace. The TCS collected is deposited by the ECO on behalf of the sellers, and each seller can claim credit for TCS collected in their electronic cash ledger on the GST portal — from where it can be used to pay GST liability or can be claimed as a refund. For active marketplace sellers, TCS can amount to a significant sum (1% of annual marketplace revenue), and tracking it correctly and claiming it timely is an important cash flow management task. N D Savla & Associates reconciles TCS deducted per the settlement statements against the TCS credited in the seller's electronic cash ledger on the GSTN portal, and ensures timely utilisation or claim of accumulated TCS credit.
03

GST Compliance for E-Commerce — Specific Provisions

The GST treatment of e-commerce has specific provisions that differ from standard GST treatment. The key points are: (1) All e-commerce sellers must be registered for GST regardless of turnover — there is no turnover threshold exemption for marketplace sellers. (2) The place of supply for marketplace sales is typically the delivery address of the customer — which determines whether the supply is intra-state (subject to CGST + SGST) or inter-state (subject to IGST). (3) The marketplace operator (ECO) files GSTR-8 monthly, reporting all supplies made through its platform seller-by-seller, and this data auto-populates in the seller's GSTR-2B as outward supplies. The seller must reconcile their own GSTR-1 with the GSTR-8 data filed by the ECO to ensure consistency. (4) Returns and refunds reduce the net taxable supply on which TCS is computed. N D Savla & Associates manages the complete GST compliance for e-commerce sellers — GSTR-1, GSTR-3B, and the reconciliation with ECO GSTR-8 data.
04

Multi-Platform Revenue Reconciliation

Many e-commerce businesses sell across multiple platforms simultaneously — Amazon, Flipkart, their own Shopify or WooCommerce website, Instagram/Facebook social commerce, and possibly also offline through a physical store. Each platform has its own settlement mechanism, its own fee structure, and its own reporting format. The accounting challenge is to compile revenue from all these sources into a single, consistent set of books that correctly records all sales, all fees, all refunds, and all TCS deductions across every platform. N D Savla & Associates develops a platform-specific reconciliation methodology for each platform used by the seller, aggregating all revenue streams into a consistent accounting framework that provides a complete picture of the business's financial performance across all channels.
05

Inventory Accounting for E-Commerce — FIFO, Weighted Average, and FBA

Inventory accounting for e-commerce businesses presents challenges that are specific to the online retail model. For Amazon FBA (Fulfillment by Amazon) sellers, inventory is physically held in Amazon's fulfillment centres across multiple locations — which means the inventory accounting must track the movement of goods from the seller's warehouse or supplier to Amazon's FC, the transfer between FCs when Amazon rebalances inventory, the pick and fulfillment of orders, the return of goods from customers, and the disposal or return to seller of unfulfillable inventory. The inventory valuation method — FIFO (First In First Out) or weighted average cost — affects the cost of goods sold and the closing inventory value, and must be consistently applied. N D Savla & Associates implements the appropriate inventory accounting framework for each client, integrating inventory records with the accounting software and reconciling physical inventory at regular intervals.
06

Advertising Spend and Return on Ad Spend (ROAS) Analysis

E-commerce businesses invest significant amounts in marketplace advertising — Amazon Sponsored Products, Flipkart Product Listing Ads, Google Shopping, and Meta/Instagram ads. These advertising costs are deducted from the seller's settlement account by Amazon and Flipkart, or billed separately by Google and Meta. In the accounting, advertising spend must be recorded separately from the marketplace fees (commissions) so that the business can track its total advertising expenditure and compute the Return on Ad Spend (ROAS) — the ratio of revenue generated to advertising spent. N D Savla & Associates records advertising expenses in a dedicated ledger and provides advertising spend analysis as part of the monthly MIS for e-commerce clients, enabling management to assess the effectiveness of advertising across platforms and product categories.

Our Process

Our E-Commerce Accounting Process

Step 1: Platform Connectivity and Settlement Statement Access — We set up access to the settlement reports from each marketplace platform — Amazon Seller Central, Flipkart Seller Hub, Meesho, and others. For website sales (Shopify, WooCommerce), we connect to the payment gateway settlement reports. We establish a monthly data collection routine where settlement statements are provided to us within the first five working days of the following month.

Step 2: Settlement Statement Reconciliation — We download and process the settlement statements from each platform, reconciling each component — gross sales, returns, marketplace fees, advertising charges, FBA fees, storage fees, and TCS — to the bank settlement amounts. We prepare a summary reconciliation that confirms that the bank credits equal the gross sales minus all deductions, and that every deduction is correctly categorised.

Step 3: Books Entry and GST Recording — We enter the reconciled figures into the accounting software — recording sales at full invoice value (grossed up from the settlement), recording marketplace fees and other deductions as expenses, and recording TCS as a recoverable asset. Every transaction is classified with the correct GST treatment — B2B or B2C, intra-state or inter-state, correct HSN code and GST rate.

Step 4: GST Return Preparation and TCS Reconciliation — We prepare GSTR-1 (reconciled with the ECO GSTR-8 where available), GSTR-3B (with TCS credit applied from the electronic cash ledger), and maintain the TCS tracking register. We reconcile TCS per the settlement statements with TCS per the GSTN electronic cash ledger and advise on utilisation or refund of excess TCS.

Step 5: Monthly MIS — Platform-Wise Revenue, Margins, and Profitability — We prepare the monthly MIS showing revenue by platform, revenue by product category, gross margin by SKU group, advertising spend and ROAS by platform, return rate by product, and overall profitability. This platform-level and product-level financial visibility enables management to make informed decisions about platform prioritisation, product range, and advertising allocation.

*ℹ Note: E-Commerce GST Registration Mandatory: Under Section 24 of the CGST Act, every supplier making supplies through an electronic commerce operator is required to register under GST, regardless of turnover. There is no basic exemption threshold for e-commerce sellers. N D Savla & Associates handles GST registration for new e-commerce sellers and ensures ongoing GST compliance throughout the year.

In Detail

Contact N D Savla & Associates for E-Commerce Accounting

N D Savla & Associates provides specialised accounting services for e-commerce businesses and online sellers across India. Contact us for a free consultation to discuss your marketplace setup, current accounting challenges, and how we can provide accurate, compliant, and insightful accounting for your online business.

Related Services

Explore Our Wider Practice

These services connect directly with this engagement across the bookkeeping & accounting function:

Outsourced Accounting Mumbai
QuickBooks Accounting
GST Return Filing
Financial Reporting MIS
Accountant Services
GSTR 2B Reconciliation

Frequently Asked Questions

Common Questions

What is TCS under Section 52 of the CGST Act and how is it claimed?

Section 52 of the CGST Act requires marketplace operators (ECOs) to collect Tax Collected at Source (TCS) at 1% of the net value of taxable supplies made through their platform. The TCS is deposited by the ECO on behalf of the seller and credited to the seller's electronic cash ledger on the GSTN portal. The seller can use this credit to pay their own GST liability in GSTR-3B, or claim a refund if the credit exceeds the liability. TCS credit must be tracked monthly (by comparing settlement statements with the GSTN electronic cash ledger) to ensure it is correctly claimed and not lost. N D Savla & Associates manages the complete TCS credit tracking and utilisation for all e-commerce clients.

How is the marketplace settlement reconciled with the revenue in the books?

The settlement reconciliation starts with the gross sales figure (the full amount charged to customers, before any marketplace deductions). This gross sales figure is the revenue in the books. From the gross sales, the marketplace deducts: returns and refunds (which reduce revenue); marketplace fees/commissions (recorded as a selling expense); FBA fulfillment fees (recorded as an expense — logistics/fulfillment cost); storage fees (recorded as an expense); advertising charges (recorded as a marketing expense); and TCS (recorded as a recoverable asset). The net of all these deductions equals the amount credited to the seller's bank account. N D Savla & Associates prepares this reconciliation for every settlement period and ensures the books correctly reflect all components.

Is GST mandatory for e-commerce sellers even with low turnover?

Yes. Under Section 24 of the CGST Act, any person supplying goods or services through an electronic commerce operator is required to register for GST regardless of their aggregate turnover. The normal turnover thresholds (Rs. 20 lakh for services, Rs. 40 lakh for goods) do not apply to e-commerce sellers. This means even a seller with annual marketplace revenue of Rs. 5 lakh must be registered for GST. N D Savla & Associates handles GST registration for e-commerce sellers and ensures all ongoing compliance obligations are met.

Can N D Savla handle accounting for sellers on multiple platforms?

Yes — we handle multi-platform e-commerce accounting as a standard service. We develop platform-specific reconciliation methodologies for each marketplace (Amazon, Flipkart, Meesho, Myntra, own website) and aggregate all platforms into a single, consistent set of books. The monthly MIS shows platform-wise revenue, margins, and key metrics alongside the overall business P&L.

What accounting software is best for e-commerce sellers?

QuickBooks Online is particularly well-suited for e-commerce sellers because of its integration capabilities with e-commerce platforms and payment gateways. Tally Prime is also widely used for e-commerce accounting in India and handles GST well. Zoho Books integrates natively with Zoho Commerce and has good connectivity with major payment gateways. N D Savla & Associates works with any of these platforms and can advise on the most appropriate choice based on the seller's specific needs, volume, and budget.

Speak with N D Savla & Associates

Chartered Accountants, Mumbai & Pune. Talk to our team about Accounting for E-Commerce Business — scope, timelines and how the engagement is structured for your business.

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