How to setup and account for GST-TCS and TDS by Ecommerce Operators in Sales Invoices?

ERPNext Accounting
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1

Hello-

Can anyone recommend the best workflow to record Sales Invoices issued by e-commerce operators such as Amazon, Flipkart etc? And consequently accounting for the GST-TCS and TDS deducted by them before transferring payments to our bank account.

Please consider the following example:
image

Currently, I’m recording a Sales Invoice with a total of ₹336.00 (Row 1-4)
A Purchase Invoice is recorded for ₹106.58 (Row 8-11)
The payment receipt is recorded for ₹223.73 (Row 12)

How do I account for the TCS and TDS (Row 5-7)?
Is a Journal entry the best way to do it?

Or is there a better way? A journal entry for each transaction will be too slow and painful.

Any help is appreciated.

2

You can use Taxes and Charges section in Sales Invoice to record these. You may have to create separate Account for TCS etc.

3

If I add the amounts in Taxes & Charges, the invoice total will exceed the Order value.
I cannot even reduce the Taxable Amount, otherwise GST calculations will be impacted.

4

Also, TCS is not an additional tax item. Only a portion of GST already deducted before payment. Ideally, it should be added as credits to the current GST accounts.

5

You can create tax templates as per your accounting structure and achieve the below

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6

To properly account for GST-TCS and TDS in ERPNext for sales through e-commerce operators like Amazon or Flipkart, follow this structured workflow:

1. Understand the Deductions:

  • TCS (Tax Collected at Source) under Section 52 of CGST Act: 1% (0.5% CGST + 0.5% SGST or 1% IGST).

  • TDS under Section 194-O of the Income Tax Act: 1% on gross sales.

These are deducted by the platform before remitting the amount to your bank.

2. Chart of Accounts Setup:

Create these accounts under Chart of Accounts:

  • TCS Receivable under GST (Asset)

  • TDS Receivable (Asset)

  • E-Commerce Platform Fees (Expense)

  • E-Commerce Commission GST Input (Asset → GST Input)

3. Create/Update Customer:

Set Amazon/Flipkart as Customer Type: Company, and mention GSTIN of the platform.

4. Create Sales Invoice:

  1. Make the invoice to the end customer (not Amazon).

  2. Use appropriate GST tax templates.

  3. Amount is gross (before TCS/TDS deductions).

  4. Mark the e-commerce platform under “E-Commerce Operator” (if customized field exists).

5. Record Payment Entry:

  1. Go to Payment Entry → “Receive”.

  2. Link it to the sales invoice.

  3. Paid Amount = Net remittance received in bank.

  4. Under Deductions:

  • Add TCS Receivable with amount deducted as TCS.

  • Add TDS Receivable with amount deducted as TDS.

This way, the invoice is fully settled, and TCS/TDS is tracked.

6. Reconcile with GSTR-8 (TCS) and 26AS (TDS):

  • Match the TCS in GSTR-8 portal filing.

  • Match TDS in Form 26AS, claim during ITR filing.

Optional: Add Automation

Use ERPNext custom scripts or workflows to automate recurring entries or reconciliation. Get professional assistance from CA or a team of professionals e.g. Setindiabiz to properly maintain your TDS & TCS for accounting for GST-TCS and TDS in ERPNext software.