Marketplace payments are not paid to you gross. Two kinds of tax flows get subtracted or collected along the way: TCS (collected by the marketplace on sales) and TDS (withheld by the marketplace when it pays you).
Both are real money that never reaches your bank account. Both have to appear in your accounting, or your receivables and your tax registers will silently disagree.
TCS on ecommerce sales
When a marketplace sells on your behalf, it collects Tax Collected at Source from the buyer on the sale value (where the rules apply). Key facts for accounting:
- TCS is collected by the marketplace, not by you directly.
- It is reflected in the settlement report as a deduction or a pass-through.
- The marketplace files and remits TCS against your PAN.
- You claim it as available TCS in your returns, matching the marketplace’s filing.
In your books, TCS shows up as a tax collected account that must reconcile against the marketplace’s TCS statement.
TDS on marketplace payments
Separately, when the marketplace settles money to you, it may withhold Tax Deducted at Source as a payer. The effect:
- The payout is lower than the settlement amount by the TDS.
- The marketplace issues a TDS certificate you can use.
- In your accounting, TDS withheld becomes a tax asset, not a cost.
TDS and TCS are not deductible expenses and not suspense figures. They are tax-related receivables and liabilities that must be tracked per marketplace and per period.
Where they collide with settlements
Settlements carry both effects as line items:
| Settlement line | Type | Accounting treatment |
|---|---|---|
| Sales value collected | TCS collected on sales | Tax collected account, reconcile to TCS return |
| TDS withheld on payout | TDS deducted by marketplace | Tax deducted at source receivable |
| Net payout | Remitted to bank | Matches after both are recorded |
If either is missing from the books, the payout will appear short and your GST-ledger data will not tie to the marketplace statements.
What has to be captured per order
To reconcile any of this, the data needs to live at order level:
- Eligible sales with their TCS rates and amounts.
- TDS heads and amounts applied per period or per payment.
- Which orders / settlements each TCS and TDS line belongs to.
- Filing periods so the figures can be cross-checked against GST returns and TDS certificates.
When that detail exists, TCS and TDS stop being reconciliation mysteries and become two more explained rows in a clean monthly close.
DeepEcom and tax reconciliation
DeepEcom carries TCS and TDS as first-class data: captured from marketplace data, reported per order, and carried into order-wise and GST-wise accounting so the ERP posting remains complete and traceable.