Marketplaces withhold tax on the gross order value — including orders that were returned, refused at the door or cancelled before dispatch. At the current rates of 0.1% TDS under Section 194-O and 0.5% GST TCS under Section 52, that capital sits blocked until you reconcile it.
Direct Summary: Amazon, Flipkart and Meesho deduct 0.1% TDS under Section 194-O and collect 0.5% GST TCS under Section 52 — a combined 0.6% — on the gross order value of every order, including those later returned or cancelled. For a store generating ₹10,00,000 in monthly GMV with 32% non-delivered merchandise, that is ₹1,920 per month (₹320 TDS plus ₹1,600 TCS), or roughly ₹23,040 a year held in the tax system rather than the operating account. Both are recoverable: the TDS via Form 26AS and AIS when filing your ITR, the TCS via Table 9B of GSTR-3B. Note that CBDT Circular 14/2023 states no 194-O TDS is required where the entire consideration is refunded, and Section 52 TCS applies to net value after returns — so a deduction on a fully refunded order is arguably wrong at source and worth raising with the marketplace first.
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| Transaction Layer | Gross Billed | Tax Deducted | Recoverable |
|---|
Recoverable means creditable against your liability — it is a timing drag, not a permanent cost.
CBDT Circular 14/2023 states that no TDS u/s 194-O is required where the entire consideration is subsequently refunded to the buyer. Section 52 GST TCS is levied on the net value of taxable supplies — that is, after returns. For orders that were fully refunded or never dispatched, the deduction is arguably incorrect at source. Raise a correction ticket with the marketplace citing both, with the order references and the refund dates attached.
Whatever the marketplace declines to reverse remains creditable. Reconcile Form 26AS and AIS against your books when filing the ITR to claim the TDS, and confirm the TCS figure appears in Table 9B of GSTR-3B. Reconcile period by period rather than in aggregate — the 7 to 14-day payout lag means the deduction frequently lands in a different period from the sale.
Verify before filing or disputing. Rates were reduced with effect from 1 October 2024; confirm which rate applies to your accounting period and to your deductor's TAN. This tool quantifies exposure so you can ask a precise question — it does not replace your chartered accountant.
At ₹1,000,000 monthly GMV with 16% customer returns, 12% courier RTO and 4% cancellations, non-delivered merchandise value is ₹320,000 per month (32% of volume). At the current FY2026 rates of 0.1% TDS under Section 194-O and 0.5% GST TCS under Section 52, blocked capital is ₹1,920 per month and ₹23,040 per year — split ₹320 TDS and ₹1,600 TCS. The entire amount is recoverable by reconciling Form 26AS/AIS in your ITR and GSTR-3B Table 9B on the GST portal.
| Transaction layer | Gross billed | Tax deducted | Recoverable |
|---|---|---|---|
| Delivered orders | ₹680,000 | ₹4,080 | Regular credit |
| Customer returns | ₹160,000 | ₹960 | ₹960 |
| Courier RTO | ₹120,000 | ₹720 | ₹720 |
| Pre-dispatch cancellations | ₹40,000 | ₹240 | ₹240 |
| Total blocked | ₹320,000 | ₹1,920 | ₹1,920/mo |
Verify before filing. Section 194-O TDS was reduced from 1% to 0.1% and Section 52 TCS from 1% to 0.5% with effect from 1 October 2024. Confirm the rate applicable to your accounting period and your deductor's TAN before claiming, and reconcile against Form 26AS/AIS and GSTR-3B Table 9B. This tool quantifies exposure; it does not replace your chartered accountant.
/marketplace-tax-reconciliation?gmv=1000000&ret=16&rto=12&cancel=4®ime=current
Two separate mechanisms withhold money at the point of settlement. They are claimed through different systems, which is why they need reconciling separately.
The e-commerce operator deducts tax at source on the gross amount of sales facilitated through its platform and deposits it against your PAN. It appears on your payment statement and in your Form 26AS and AIS.
The operator collects tax at source on the net value of taxable supplies made through it and credits the amount to your electronic cash ledger on the GST portal.
Model the 7–14 day payout lag against supplier credit terms.
Find fee, weight and commission overcharges across your statement.
Rule 46 compliant invoices and 4×6 thermal dispatch labels.
118 commodity codes with conditional price-threshold rules.