Pull any AJIO or Meesho settlement statement and three small tax lines stare back at you: a TDS deduction, a TCS deduction, and GST charged on the marketplace's own fees. Individually they are tiny — often single-digit rupees on a low-ticket order. Across a year of selling they add up to real money, and here is the part that matters: none of it is supposed to be a cost. All three flows are designed to come back to you. They just don't come back on their own.
This post decodes what each line is, where the money physically goes, and the monthly ritual that gets the reclaimable parts back. One honest disclaimer up front: we build an agentic OMS for marketplace sellers — we are not chartered accountants, and this is not tax advice. Rates and rules below are stated as of writing and sourced to gst.gov.in and incometax.gov.in; verify current figures there or with your CA before filing anything.
The three tax flows on a marketplace settlement
Income-tax TDS — section 194-O. Since e-commerce operators became deduction agents under section 194-O of the Income-tax Act, marketplaces deduct tax at source on the gross value of what you sell through them. As of writing the rate is 0.1% of gross sales (it was 1% when the section first came in, so older blog posts disagree with newer statements — check incometax.gov.in for the current figure). The marketplace deposits this against your PAN. It shows up in your Form 26AS and AIS, and it offsets your income-tax liability when you file your return. Think of it as advance tax someone else paid for you.
GST TCS — section 52 of the CGST Act. The marketplace also collects tax at source on the net taxable value of your supplies — 0.5% as of writing (0.25% CGST plus 0.25% SGST for intra-state, or 0.5% IGST). This is deposited against your GSTIN. On the GST portal it appears as auto-populated TCS credit entries; once you accept them, the amount sits in your cash ledger and can be used to pay your GST liability. Unaccepted entries help nobody.
GST on marketplace fees. Different animal. This is not the marketplace collecting tax on your behalf — it is the marketplace charging you 18% GST on its own services (commission, logistics, processing). Because you are a registered business buying a service, that GST is input tax credit: it offsets the GST you owe on your own sales, provided the marketplace's fee invoices flow into your GSTR-2B and you claim them.
Where the lines appear in AJIO and Meesho settlements
Both marketplaces print these lines per settlement, though label names shift between statement formats. On an illustrative ₹1,000 order: GST on commission and fees might read −₹36 (18% on ₹200 of charges), GST TCS −₹5, income-tax TDS −₹1. The instinct to treat these as “more marketplace charges” is exactly wrong — they belong in a different mental bucket from commission. Commission is gone. These are parked.
Each line must tie back to a verification document, and this is where small sellers leak: the GST-on-fees line ties to marketplace fee invoices in your GSTR-2B; the TCS line ties to the TCS credit section of the GST portal; the TDS line ties to Form 26AS / AIS. If a settlement shows a deduction that never appears in the corresponding portal, you have a deducted-but-not-deposited gap — rare, but worth a marketplace ticket every time, because it is your money sitting in limbo.
The monthly reclaim ritual
Thirty minutes a month keeps all three flows honest. The ritual, in order:
- Total the lines. From every settlement statement in the month, sum three numbers: TDS deducted, TCS deducted, GST charged on fees. This is your expectation for everything that follows.
- Accept TCS on the GST portal. Open the TDS/TCS credit section, check the auto-populated entries against your total, and accept them. Accepted TCS lands in your cash ledger; unaccepted TCS is just a number on a screen.
- Claim input credit on fee GST. Confirm the marketplace's fee invoices appear in your GSTR-2B for the period, and that your filing claims the credit. Missing invoices are a marketplace-support ticket.
- Check Form 26AS / AIS quarterly. TDS deposits show up against your PAN on a lag. Quarterly is enough — the point is that the year-end total matches what your settlements say was deducted.
- Chase any gap. Deducted-but-not-deposited differences get a ticket with the marketplace, with statement lines attached. These are rare and usually timing, but the check costs minutes and the alternative is silent loss.
Three myths that quietly cost sellers money
Myth one: “TCS means I am being taxed twice.” No — TCS is not an additional tax on top of your GST liability; it is a portion of that liability collected early, through the marketplace. Once accepted on the portal it sits in your cash ledger and pays down the same GST you would have paid anyway. Sellers who believe the double-tax myth sometimes price their products up to “cover” it, quietly making themselves less competitive for no reason.
Myth two: “I am under the turnover threshold, so GST does not apply to me.” The general registration thresholds mostly do not rescue marketplace sellers — supplying through an e-commerce operator brings its own registration requirements, and the TCS mechanism assumes a GSTIN to deposit against. There are narrow relaxations for certain small intra-state suppliers, with conditions attached; if you plan to rely on one, confirm it on gst.gov.in or with a CA first, not after the notice.
Myth three: “The marketplace handles my taxes.” The marketplace handles the deducting. The claiming — accepting TCS, claiming input credit, offsetting TDS at filing — is entirely yours, and nothing happens by default. A useful way to feel the stakes: a seller doing ₹2 lakh a month of sales with ₹40,000 of marketplace fees is accumulating roughly ₹7,200 of fee-GST input credit, ₹1,000 of TCS, and ₹200 of TDS every month — illustrative numbers, but the shape is right. Left unclaimed for a year, that is over a lakh of parked money doing nothing.
Why this is an operations problem, not an accounting problem
Here is the trap with marketplace tax lines: by the time they reach your accountant, they are aggregates. The CA sees a quarter's TCS total; they cannot see that one settlement's deduction never made it to the portal, or that a statement format change in March silently doubled a line. The verification has to happen close to the settlements themselves — which makes it an ops discipline, the same muscle as payment reconciliation. Sellers who reconcile per-order already have the tax lines totalled as a by-product; sellers who do neither end up reconstructing a year of statements every March.
The multi-marketplace wrinkle makes the case stronger. A seller on both AJIO and Meesho has two sets of statements, two label vocabularies for the same three tax concepts, and two streams of TCS landing against one GSTIN. The portals aggregate by operator, so the monthly check becomes: does AJIO's TCS plus Meesho's TCS equal what the portal shows in total, and does each operator's slice tie to its own statements? Same logic for 26AS, which lists deductors separately. It is fifteen extra minutes — and it is also exactly the kind of cross-source totalling that quietly stops happening in a busy month unless something does it for you.
It also changes how you read your own margins. A seller who books TDS, TCS, and fee-GST as pure cost understates their real margin on every order — and then makes pricing decisions on the understated number. Per-order profit done properly treats reclaimable tax as reclaimable. The difference on thin fashion margins is not academic.
Where Robnu fits
Robnu is an agentic OMS with AJIO and Meesho operations live — it runs daily order processing and, because every settlement line stays tied to its order, the monthly tax totals fall out automatically: TDS, TCS, and fee-GST summed per month, per marketplace, ready to check against the portals or hand to your CA. Robnu does not file returns and will not pretend to; it makes the thirty-minute ritual a ten-minute one by killing the statement archaeology.
Robnu is free for everyone right now — every feature, every order, no card, no trial timer — while we figure out paid pricing. When it launches, sellers under 25 orders/day stay free forever, and today's users get grandfathered locked rates. Start with this month's statements: total the three lines, open the two portals, and see if the numbers tie. If they do not, you have just found money.