GST on a marketplace or platform fee is not the same thing as GST on a shipping or logistics charge. Treat each charge as a separate service until the contract, tax invoice and applicable notification show that it is bundled or recharged. A platform may charge GST on its own commission or technology service; a logistics provider may charge for transport, courier, delivery, warehousing or fulfilment under a different rule. A settlement deduction labelled “TCS” is different again: it is collection under section 52 of the Central Goods and Services Tax (CGST) Act, not GST on the platform fee. Section 9(5), under which an e-commerce operator can become liable for GST on specifically notified services, is a separate liability rule.
This India-focused guide explains how to classify both charges, reconcile marketplace statements, and avoid quoting a rate that the evidence does not support. It is a framework for checking transactions, not a determination of the GST treatment of any particular seller’s contract.
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The short answer: classify the service, not the label
“Platform fee”, “commission”, “referral fee”, “shipping”, “delivery” and “logistics” are commercial labels. None, by itself, establishes the GST treatment. Start with five factual questions:
- Who supplied the service and who contracted for it?
- Who is the recipient named or described in the tax invoice?
- What exactly was supplied: platform access, commission, transport, courier, local delivery, warehousing, fulfilment or a bundle?
- Does the contract make the charge a separate supply, a recharge, or part of another supply?
- Which current rate notification, forward-charge rule, reverse-charge rule or section 9(5) notification applies on the transaction date?
Only after those questions are answered should you post GST in your books or assess input tax credit. The amount deducted from a settlement statement is not reliable evidence of the legal nature of the charge.
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Keep the three GST concepts separate
Online sellers commonly see three different tax events in one settlement. Combining them creates errors in returns, reconciliations and input-tax-credit records.
| Item seen in records | What it generally represents | What must be verified |
|---|---|---|
| Platform, referral, commission or marketplace fee | A service supplied by the platform or another contracted provider. The invoice may show GST on that service. | Actual supplier, recipient, description, classification, place-of-supply facts, tax rate and whether the amount is a separate or bundled supply. |
| Logistics, delivery, shipping or fulfilment charge | A transport, courier, local-delivery, warehousing, fulfilment or related service. The supplier may be the marketplace, a group company or an independent carrier. | Exact service, contracting party, invoice issuer, transport-specific provisions, reverse-charge possibilities, section 9(5) notification and the current rate. |
| TCS deduction in a settlement | Collection under CGST Act section 52 on covered taxable supplies made through an e-commerce operator when the operator collects consideration. | Whether the operator is collecting consideration, whether the supplies are covered, the net-value calculation and the operator’s TCS statement. TCS is not the GST charged on the platform’s service fee. |
| GST paid by the operator on a service | Potential section 9(5) liability where the service is specifically notified and supplied through an e-commerce operator. The operator is treated as liable as if it were the supplier. | The precise notified service and the notification in force for the transaction date. Section 9(5) does not automatically cover every marketplace or delivery charge. |
The CGST Act’s section 52 explanation excludes services notified under section 9(5) from the net-value definition used for that TCS mechanism. That statutory separation is why a seller should not treat every marketplace deduction as one kind of tax.
How to analyse a platform or marketplace fee
1. Identify the service actually purchased
A commission may compensate the operator for arranging a sale. A subscription or technology charge may provide access to software, listings, advertising tools, payment features or account management. A “seller services” line can combine several elements. Read the platform agreement and the invoice description together; do not infer the service solely from the settlement report.
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Check the legal name and GSTIN of the invoice issuer. The marketplace brand shown on a dashboard may not be the entity that supplied the service. Confirm whether the invoice is addressed to your registered business, an unregistered business, or another entity in your group. These details affect accounting, documentation and any credit analysis.
3. Separate the invoice from TCS
If the platform issues an invoice for a commission and shows GST, that GST relates to the invoiced service, subject to the invoice and applicable law. A separate TCS amount withheld from customer collections arises under section 52 for covered seller supplies. You may see both on the same settlement: one is a service charge and the other is a statutory collection. Do not net them into a single “GST paid to marketplace” ledger.
4. Check for bundling or recharge
Some platforms arrange delivery and recover the cost in the same settlement as commission. Determine whether the platform is supplying a combined service, acting as an agent for a carrier, or merely recharging a third-party cost. The contract, invoice and any supporting carrier invoice are the starting evidence. A recharge label does not, by itself, transfer the original tax treatment to you.
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5. Record the transaction at invoice level
Capture the invoice number, date, supplier GSTIN, taxable value, GST amount, description and the related settlement reference. If a credit is considered, preserve the evidence that the service was received for business use and that the statutory conditions are met. No universal rate or guaranteed credit outcome for platform services applies on these facts, so your accounting policy should follow the invoice and current law.
How to analyse a logistics, shipping or delivery fee
Transport is not one GST category
“Logistics” can describe road transport, a courier network, local last-mile delivery, warehousing, packing, order fulfilment or a combination. The provider could be a goods transport agency, courier company, local delivery operator or the marketplace itself. Each arrangement can have different liability and documentation consequences.
The Model All India GST Audit Manual 2023 uses goods transport agency arrangements to illustrate that transport services can produce different liability outcomes, including reverse-charge scenarios. Those examples demonstrate why the service and contracting structure must be identified; they do not establish that every parcel or delivery charge is covered by the same rule.
Read the logistics contract and invoice
Look for the service description, pickup and delivery obligations, consignment or tracking references, weight or distance basis, insurance terms, invoice issuer and recipient. If the platform collects the customer’s delivery amount but a separate carrier invoices the platform, the seller’s settlement deduction may not be the seller’s purchase invoice. Ask for the underlying tax invoice or a legally adequate statement before treating the amount as an input service.
Test forward charge, reverse charge and operator liability separately
- Forward charge: the supplier charges and accounts for GST on its invoice, if the applicable law requires it.
- Reverse charge: the recipient may be liable where a specific provision applies to the identified service and parties.
- Section 9(5): the e-commerce operator is liable only for services included in a government notification. A delivery line is not enough to establish that condition.
Do not select a rate from a generic “shipping GST” chart without checking these three possibilities and the notification effective on the invoice date.
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What section 52 TCS does—and does not—mean
Section 52 of the CGST Act concerns an e-commerce operator that collects consideration for covered supplies made through it. The operator collects an amount calculated on the net value of taxable supplies, subject to the statutory terms. This collection is credited and reported through the GST system; it is not the consideration for the platform’s own service.
For example, a customer may pay ₹1,000 for goods. The operator may withhold a section 52 TCS amount from the seller’s settlement, while separately charging the seller a commission plus the GST shown on the platform-service invoice. The TCS relates to the covered sale; the commission invoice relates to the platform service. They require different ledger accounts and reconciliations.
CBIC Circular 194/06/2023-GST, dated 17 July 2023, discusses section 52 TCS where more than one e-commerce operator is involved, including an ONDC transaction structure. Its value for reconciliation is that operator roles and commission flows can coexist. It does not prescribe the GST rate for a seller’s platform or logistics invoice.
What section 9(5) changes
Section 9(5) allows the government to notify specified categories of services for which the e-commerce operator is liable to pay GST as if it were the supplier. The audit manual gives passenger-transport examples and explains the operator-liability concept. That rule is category-specific: it does not make the operator liable for every service sold through an app or marketplace.
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When reviewing a delivery charge, ask:
- Is the underlying service one of the categories notified under section 9(5)?
- Was it supplied through the type of e-commerce operator covered by the notification?
- Was the operator liable on the relevant date, or did another rule apply to the provider?
- Does the invoice or settlement evidence show who accounted for GST?
If any answer is unclear, do not label the amount “9(5) GST” merely because the order was placed online. Keep the operator’s tax payment, the seller’s service invoice and section 52 TCS as separate possibilities until the evidence resolves them.
The 2025 local-delivery recommendation: use the 18% figure carefully
A 2025 GST Council and Press Information Bureau document records a recommendation concerning certain local-delivery services supplied through an e-commerce operator where the service provider is not liable for GST registration. The document states an 18% rate and describes conditions for the proposed treatment.
That document records a recommendation and the position it sought to change. The official material reviewed for this guide does not establish the final notification or commencement date. Therefore, 18% is not a universal rate for logistics fees, delivery charges or platform fees. Before applying it, obtain the operative notification, effective date and exact service conditions for the transaction under review.
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Platform fees versus logistics fees: a practical comparison
| Comparison point | Platform fee | Logistics or delivery fee |
|---|---|---|
| Typical underlying service | Marketplace access, commission, referral, technology or seller-support service. | Transport, courier, local delivery, warehousing, packing or fulfilment. |
| Likely invoice issuer | Marketplace operator or its identified service entity. | Carrier, courier, fulfilment provider, marketplace or another contracted entity. |
| Main classification question | What platform service was supplied and to whom? | What physical or fulfilment service was supplied, and under which transport rule? |
| Section 52 relevance | TCS may appear on the seller’s customer collections, but it is not the GST on this fee. | TCS may also appear on the sale; it does not classify the logistics service. |
| Section 9(5) relevance | Usually not established merely by calling a charge a commission; check whether any notified service is actually involved. | Must be tested against the exact notified service; not every delivery charge qualifies. |
| Rate evidence | Use the tax invoice and current notification; no universal rate is established here. | Use the invoice, service classification and current notification; no universal rate is established here. |
A transaction-by-transaction reconciliation procedure
Use this workflow each month, and retain the source documents behind every adjustment.
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- Collect every tax invoice. Obtain the platform-service invoice, logistics or carrier invoice, credit notes and any invoice issued by a separate fulfilment entity.
- Map each line to a supplier. Record the legal entity, GSTIN, invoice date, service description and whether the amount was paid directly or withheld from settlement.
- Classify the service. Mark each line as platform service, transport, courier, local delivery, warehousing, fulfilment, recharge or unknown pending clarification.
- Check the liability route. Test forward charge, a specific reverse-charge provision and section 9(5) independently. Do not use the presence of an app as the test.
- Reconcile values. Match the invoice taxable value and GST to the settlement deduction or direct payment. Investigate rounding, refunds, cancelled orders and duplicate invoices.
- Reconcile TCS separately. Compare the operator’s section 52 statement and GST-credit records with the TCS line in the settlement. Do not post TCS as input tax on the platform invoice.
- Review credit eligibility. For any GST claimed as input tax, retain the invoice and evidence of business use, and check the statutory conditions and return data applicable to your registration.
- Document unresolved items. Keep a query log showing the invoice, missing contract clause or notification question. Resolve material items with the platform or a CA/GST practitioner before finalising the return.
Worked examples without assuming a rate
Example 1: Separate commission invoice and TCS
A marketplace sells a seller’s goods, deducts a commission from the settlement and issues a tax invoice that shows the commission value and GST. The same settlement also shows section 52 TCS on the customer sale. Post the commission and its invoiced GST as the platform-service transaction, subject to the normal credit checks. Post TCS in the statutory collection ledger and reconcile it to the operator’s statement. The two amounts are not interchangeable.
Example 2: Delivery arranged by the marketplace
The settlement contains “shipping” but no carrier invoice is supplied. The contract says the marketplace arranges delivery. Do not assume that the line is either a platform service or a section 9(5) service. Obtain the invoice issuer, service description, provider registration status, contract terms and applicable notification. Until then, classify it as an unreconciled logistics charge rather than applying a generic rate.
Example 3: Local delivery recommendation
A provider appears to meet the conditions described in the 2025 Council recommendation for certain local delivery supplied through an operator and is not liable for GST registration. The document mentions 18%, but the seller must still verify the final notification and effective date before using that rate. If the notification differs from the recommendation, the notification controls for the relevant period.
Records and controls that prevent disputes
- Keep the platform agreement and each amendment, including clauses on commission, delivery and recharges.
- Archive invoices in the legal supplier’s name, not only screenshots of a settlement dashboard.
- Maintain a fee master with separate codes for platform service, transport, courier, warehousing, fulfilment, TCS and section 9(5) operator-paid tax.
- Reconcile gross sales, refunds, fees, GST, TCS and net settlement to the sales register and bank statement.
- Record the notification number and effective date used for any special treatment.
- Ask for corrected invoices when the GSTIN, recipient, service description or tax amount is wrong.
- Preserve evidence for bundled charges showing how the consideration was allocated or why the contract treats it as one supply.
Common mistakes and how to correct them
Calling every deduction “GST”
Why it fails: settlements combine service charges, refunds, TCS, payment adjustments and sometimes operator-paid tax. Correction: reconcile each line to an invoice or statutory statement.
Applying one rate to every logistics line
Why it fails: logistics is an umbrella term covering services with different liability rules. Correction: identify the exact provider and service before selecting a notification.
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Treating section 52 TCS as tax on commission
Why it fails: section 52 concerns covered seller supplies for which the operator collects consideration. Correction: keep TCS separate from the platform’s service invoice.
Assuming section 9(5) covers all app-based delivery
Why it fails: operator liability applies to notified categories, not every online transaction. Correction: match the service to the notification in force on the transaction date.
Using the 2025 18% recommendation as automatic law
Why it fails: a Council recommendation is not, by itself, proof of a final notification or commencement. Correction: verify the operative notification, conditions and effective date.
Claiming input tax from a settlement deduction alone
Why it fails: a deduction may have no tax invoice, or the invoice may be issued to another entity. Correction: obtain the proper invoice and test the statutory credit conditions.
When professional review is warranted
Ask a CA or GST practitioner to examine the platform agreement, logistics contract, invoices and notifications when a charge is bundled, the invoice issuer differs from the marketplace name, a reverse-charge question arises, the operator says it has paid GST under section 9(5), or the amount is material to your return. A practitioner can also check whether a later notification changed the position after the invoice date. The correct answer depends on the actual transaction documents, not the label displayed in the seller dashboard.
Quick Recap
Decision checklist before filing
- Have platform and logistics services been coded separately?
- Does every GST amount claimed have a valid invoice addressed to the correct recipient?
- Have TCS amounts been reconciled independently to section 52 records?
- Has any claimed section 9(5) treatment been matched to a specific notification?
- Have you checked the notification and effective date for any rate, including the conditional 18% local-delivery recommendation?
- Are bundled or recharged amounts supported by the contract and underlying documents?
- Are unresolved classifications documented and escalated before the return is filed?
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