Meesho seller income tax, FY 2025-26 and FY 2026-27.
You are taxed on profit, not payouts. Here is how section 44AD, the new regime slabs, the 0.1 per cent TDS Meesho deducts and the advance tax dates fit together, with a worked example.
A Meesho seller’s income tax for FY 2025-26 is charged on business profit, which most small sellers declare presumptively at 6 per cent of digital turnover under section 44AD, then tax at the new regime slabs where income up to Rs 12 lakh is effectively tax free after the section 87A rebate. Meesho’s 0.1 per cent TDS under section 194-O is a credit against that tax, and the return for FY 2025-26 is due by 31 July 2026 where no audit applies.
- Tax follows profit, not the amount credited to your bank, so gross turnover is the starting point.
- Section 44AD deems profit at 6 per cent of digital receipts, 8 per cent of cash, turnover up to Rs 3 crore.
- New regime FY 2025-26: nil to Rs 4 lakh, then 5 to 30 per cent, with income up to Rs 12 lakh effectively tax free.
- The 0.1 per cent 194-O TDS is an income tax credit; the 1 per cent GST TCS is not, it offsets GST.
- FY 2026-27 is assessed under the Income-tax Act 2025, so section numbers change while the substance continues.
Where each withholding is actually claimed
Meesho withholds two different taxes from the same sale, and they are claimed in two different places. Sellers who treat them as one thing lose whichever they forget.
New regime slabs for FY 2025-26
These are the rates that apply to your total income once your business profit has been worked out. Slabs are marginal, so only the part of your income inside a band is taxed at that band’s rate.
| Total income | Rate | Confirm |
|---|---|---|
| Up to Rs 4,00,000 | Nil | Verify on incometax.gov.in |
| Rs 4,00,001 to Rs 8,00,000 | 5 per cent | Verify on incometax.gov.in |
| Rs 8,00,001 to Rs 12,00,000 | 10 per cent | Verify on incometax.gov.in |
| Rs 12,00,001 to Rs 16,00,000 | 15 per cent | Verify on incometax.gov.in |
| Rs 16,00,001 to Rs 20,00,000 | 20 per cent | Verify on incometax.gov.in |
| Rs 20,00,001 to Rs 24,00,000 | 25 per cent | Verify on incometax.gov.in |
| Above Rs 24,00,000 | 30 per cent | Verify on incometax.gov.in |
Two footnotes change the arithmetic for most small sellers. The section 87A rebate makes total income up to Rs 12 lakh effectively tax free for a resident individual under the new regime, so a seller whose declared profit lands under that ceiling usually pays nothing even though the slab table shows 5 and 10 per cent bands. And the Rs 75,000 standard deduction that gets quoted everywhere applies to salary income, not to business income, so a full time Meesho seller with no salary does not get it. Health and education cess is added on top of the computed tax. Confirm all three on incometax.gov.in before you rely on a number.
When the money is due, and what eats the margin
Advance tax is the part sellers forget, because nothing prompts you. The instalments build through the year whether you set money aside or not.
The three things to get right first
Presumptive taxation, in detail
What 44AD covers, the turnover limits, the five year lock-in if you opt out, and when keeping books beats the presumptive route.
The 194-O deduction
How the 0.1 per cent is computed, when Meesho deducts it, and how to check it landed against your PAN before you claim it.
Getting TCS and TDS back
The two withholdings are refunded through two different processes. Here is which one goes where and how the refund actually arrives.
Income tax is the one obligation a Meesho seller cannot outsource to the marketplace. Meesho withholds a little on your behalf and reports it, but the return, the arithmetic and the deadline are yours. The good news is that for most small sellers the calculation is short, once you know which number to start from.
Two financial years, two sets of rules
Right now you are dealing with two years at once. FY 2025-26 ended on 31 March 2026 and is assessed as assessment year 2026-27, with the return due by 31 July 2026 where no tax audit applies. That year falls under the Income-tax Act 1961, which is the law every guide, form and section number you have ever read refers to. FY 2026-27 started on 1 April 2026 and is the first year assessed under the Income-tax Act 2025, which replaces the 1961 Act from that date.
For a small seller the practical effect of the new Act is smaller than the noise around it suggests. Presumptive taxation for small businesses continues, a slab based regime continues, and TDS on ecommerce sales continues. What changes is the plumbing: section numbers are renumbered, some definitions are reworded, and forms are reissued. So the habit to build is to stop quoting section numbers from memory. If your accountant says the presumptive provision is now cited differently, that is expected, not a sign anyone has got it wrong. We use the familiar 1961 Act references in this guide because that is what FY 2025-26 is filed under and what every seller searches for, and we would rather say plainly that the numbering moves than pretend it does not.
What is actually taxable: turnover is the input, profit is the base
The commonest and most expensive misunderstanding is to treat the money Meesho credits to your bank as your income. It is not. That figure is already net of commission, shipping, return costs, penalties and the two withholdings, and it is neither your turnover nor your profit. For tax purposes your turnover is gross sales, the full value of what buyers paid before any deduction, and your profit is turnover minus the legitimate costs of earning it. Tax is charged on profit.
That is why reading the payment report properly is a tax task and not just an accounting one. The report separates sales from each deduction, which is what lets you state turnover correctly and claim your real costs. Our guide on the deductions on your payment report walks through the columns, and TCS reconciliation covers checking the withheld amounts against what the portals say was actually deposited. A seller who starts from the bank credit typically understates turnover and overstates nothing, which is the wrong direction to be wrong in.
Presumptive taxation under section 44AD
Section 44AD exists so that a small business does not have to run a full accounting system to file a return. Instead of proving your profit, you declare a presumptive percentage of turnover and the law accepts it. The rates are 6 per cent of receipts that arrive digitally and 8 per cent of receipts taken in cash. The turnover ceiling is Rs 2 crore, raised to Rs 3 crore where cash receipts are 5 per cent or less of total turnover.
A Meesho seller is close to the ideal case for this. Marketplace payouts arrive by bank transfer, so if you do not also run a cash counter your cash receipts are effectively zero, which puts you inside the Rs 3 crore limit and on the 6 per cent rate for practically everything. You file ITR-4, you are not required to maintain books under 44AD, and the return itself is short. That combination is why most sellers under a crore of turnover should at least look at the presumptive route before committing to full books.
Two conditions are worth understanding before you opt in. First, the presumptive figure is a floor. If your actual margin is 14 per cent you declare 14 per cent, not 6, because 44AD deems income to be at least the presumptive amount. Sellers who read it as a ceiling and declare 6 per cent on a genuinely fat margin are understating income. Second, if you opt out of 44AD after using it, there is a lock-out period before you can opt back in, and stepping outside brings book keeping and audit consequences with it. Neither of those is a reason to avoid the scheme, but both are reasons to decide deliberately with an accountant rather than by default. Our 44AD guide for resellers goes through the mechanics, and income tax for online sellers covers the wider picture if you sell on more than one channel.
A worked example on Rs 40 lakh of Meesho turnover
Take a seller with Rs 40,00,000 of gross Meesho sales in FY 2025-26, all of it settled by bank transfer, no cash receipts, no salary income and no other business. Under 44AD the presumptive profit is 6 per cent of Rs 40,00,000, which is Rs 2,40,000. That is the figure that goes into the return as business income, and it sits below the Rs 4,00,000 nil band, so the computed tax is zero before the rebate even comes into play.
Now the part that matters: Meesho will have withheld 0.1 per cent of gross sales under section 194-O across the year, roughly Rs 4,000 on Rs 40 lakh. That money is already sitting against your PAN. With a nil liability, the whole of it is refundable, and the only way to get it is to file the return. A seller who skips filing because the tax is nil is simply making a gift of the deducted amount. The same logic applies to any advance tax paid.
| Scenario | Declared business income | Tax before cess | After 87A rebate |
|---|---|---|---|
| Presumptive 6 per cent on Rs 40 lakh | Rs 2,40,000 | Nil, inside the nil band | Nil, refund of TDS due |
| Actual profit declared higher | Rs 9,00,000 | Rs 30,000 | Nil, income is under Rs 12 lakh |
| A larger seller | Rs 16,00,000 | Rs 1,20,000 | Rs 1,20,000 plus cess, rebate does not apply |
Read the third row carefully, because it is where the cliff sits. The 87A rebate applies up to a total income ceiling; cross it and the rebate falls away and the slab tax becomes real money. A seller whose declared income is hovering near that ceiling should be planning the year deliberately rather than discovering the position in July. These are worked illustrations on stated assumptions, not advice on your own case; run your real numbers with a chartered accountant.
Six steps before you press file
Do these in order and the return itself takes an hour. Do them out of order and you will be re-entering figures.
Pull every monthly payment or settlement report for the financial year from the Supplier Panel and keep them together. Turnover for tax is your gross sales, not the net amount credited, so you need the reports that show sales separately from commission, shipping and other deductions.
Add up gross sales across the year, subtract genuine sales returns, and check the total against your GST returns for the same period. If the two disagree, find out why before you file, because a turnover figure that does not match your GST filings is the easiest discrepancy for the department to spot.
Log in to incometax.gov.in and open Form 26AS and the Annual Information Statement. Both should show the 194-O TDS Meesho deducted for you. Confirm the total matches what your own reports say was withheld, because you can only claim credit for what has actually been deposited against your PAN.
A small seller declaring presumptive income under 44AD files ITR-4. If you are reporting actual profit with full books, or you have income the presumptive route cannot cover, ITR-3 is the usual form. Pick this before you start filling anything, because switching later means re-entering everything.
List every advance tax challan you paid, every self assessment payment, and the 194-O TDS from 26AS. These are the credits that reduce what you owe or produce your refund, and a missed challan is money you have already paid and will not get back unless you claim it.
File by 31 July 2026 for FY 2025-26 if no audit applies, then complete the e-verification, because an unverified return is treated as not filed. Keep the payment reports, bank statements, challans and the filed return itself together for the year, so that a query two years from now is a folder lookup rather than an investigation.
TDS under section 194-O, and why GST TCS is a different animal
Section 194-O makes an ecommerce operator deduct tax at 0.1 per cent on the gross amount of the sales it facilitates for a seller. Meesho takes it out before paying you and deposits it against your PAN, which is why it shows up in Form 26AS and in the Annual Information Statement on the income tax portal. It is a prepayment of your own income tax, so you claim it as a credit when you file, and any excess over your liability comes back as a refund.
The 1 per cent collected under GST is a completely separate thing wearing a confusingly similar name. TCS under GST sits in your electronic cash ledger on the GST portal, and it offsets GST liability. It does not touch your income tax at all. The two live on different portals, are claimed in different returns, and are refunded by different routes. Every year sellers either claim the GST collection against income tax, which is wrong and gets corrected, or forget the GST collection entirely and leave a balance sitting unused in the cash ledger, which is money they have already paid. Check both places every year. Our TCS and TDS refund guide separates the two claims, and GSTR filing on Meesho sales covers the GST side of the same data.
Advance tax: four dates, and one shortcut for presumptive filers
If your total tax for the year will be Rs 10,000 or more after TDS credit, you are expected to pay it through the year rather than at the end. The standard instalment dates are 15 June, 15 September, 15 December and 15 March, each carrying a cumulative share of the year’s liability. Miss an instalment and interest is charged on the shortfall, which is a small but entirely avoidable leak.
Presumptive filers get a genuine simplification here: a taxpayer declaring income under the presumptive scheme may pay the whole of the advance tax in one payment by 15 March. That removes three deadlines from your year, which is a real benefit if you are running the business alone. It also concentrates the cash requirement into one month, so the practical habit is still to set the money aside monthly even though only one date binds you. A seller who has spent the tax money by February has not saved anything by having fewer deadlines.
Records to keep, and for how long
Even under the presumptive scheme, where full books are not required, you want the evidence that supports the numbers you declared. Keep the monthly Meesho payment and sales reports for the whole year, your bank statements showing the settlements arriving, every advance tax and self assessment challan, the Form 26AS you relied on, your GST returns for the same period, and the filed return with its acknowledgement. If you also claim business expenses because you are reporting actual profit, keep purchase invoices and expense bills, not just a spreadsheet.
Two habits make the difference. Store them by financial year, in one folder, at the time they are generated rather than at filing time, because a report you can download today may be harder to retrieve eighteen months from now. And keep the reconciliation itself, the working that shows how gross sales in the reports became the turnover figure in the return. When a query arrives, that single sheet answers it, and without it you are rebuilding a year of arithmetic from memory.
Sources & further reading
Your return is only as right as your sales data
Filing is your accountant’s job. Knowing your real turnover, your real deductions and whether the marketplace actually paid what it owed is where a year of admin either happens or does not. Robnu is the agentic OMS for Meesho, AJIO and Amazon sellers: it runs the daily order operations, sync, processing, returns and claims, and it reconciles every settlement line so commission, shipping and return charges are checked against what each order should have earned. When the month closes with the money verified, turnover for the year is a number you read rather than reconstruct.
Free for every seller right now, and forever free under 25 orders a day when paid pricing launches. See it on Meesho OMS or read the TCS reconciliation guide for the checks that protect the withheld amounts.
Meesho seller income tax, answered
You pay income tax on the profit your Meesho business earns, not on the money that lands in your bank. If you trade as a sole proprietor, that profit is added to your personal income and taxed at your slab. Even in a year where the tax works out at nil, you normally still file a return, because the TDS Meesho deducted and the advance tax you paid are only refunded through a filed return.
For a Meesho seller who does not need a tax audit, the return for FY 2025-26 (assessment year 2026-27) is due by 31 July 2026. If your case requires an audit the date is later, and the department has extended the July date in some past years. Treat 31 July 2026 as your working deadline and confirm it on incometax.gov.in closer to the time.
The Income-tax Act 2025 replaces the Income-tax Act 1961 from 1 April 2026, so FY 2026-27 is assessed under the new Act. The substance a small seller cares about, presumptive taxation for small businesses and a slab based regime, continues, but the section numbers and some wording change, which means the familiar phrase section 44AD will start being cited differently. Confirm the new references with a chartered accountant rather than assuming the old numbers.
Section 44AD lets a small business declare a presumptive profit instead of maintaining full books. Digital receipts are taken at 6 per cent of turnover and cash receipts at 8 per cent. The turnover limit is Rs 2 crore, extended to Rs 3 crore where cash receipts are 5 per cent or less of total turnover, which almost every Meesho seller satisfies because marketplace payouts arrive by bank transfer. You file ITR-4 and you are not required to keep full books.
It is a floor, not a cap. Section 44AD deems your income to be at least 6 per cent of digital turnover, and you may declare more if your actual profit is higher. What you cannot do is declare less while staying inside 44AD. If your real margin is below the presumptive figure and you want to report that, you step outside 44AD, keep proper books and face the audit and record keeping consequences, so take advice before choosing that route.
Under section 194-O an ecommerce operator deducts TDS at 0.1 per cent on the gross amount of the sales it facilitates for you. Meesho deducts it before paying you and deposits it against your PAN. You claim it as a credit against your income tax liability when you file, and you verify the amount in Form 26AS and the Annual Information Statement on the income tax portal. If your tax works out lower than the TDS deducted, the excess comes back as a refund.
No, and this is the single most common mix-up. The 1 per cent TCS an ecommerce operator collects under GST is a GST credit: it sits in your electronic cash ledger on the GST portal and offsets GST, not income tax. The 0.1 per cent deducted under section 194-O is the income tax one, and it appears in Form 26AS. Two different taxes, two different portals, two different claims, and confusing them means one of them never gets claimed at all.
If your total tax liability for the year is Rs 10,000 or more after TDS credit, advance tax applies. The general instalment dates are 15 June, 15 September, 15 December and 15 March. A taxpayer declaring income under the presumptive scheme gets a concession: the whole amount can be paid in one go by 15 March. Missing instalments attracts interest, so the simplest habit is to set money aside monthly and pay by the due date rather than reconstructing it in March.
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