GST on Marketplace Fees: How to Claim the ITC

Your Flipkart fee invoice for October says ₹2,36,000. ₹36,000 of that is GST, and it's yours to claim back. Most small sellers never do. The invoice sits in a Seller Hub tab nobody opens, and the ITC expires on 30 November of the following year.

The fix is ten minutes a month. And for sellers whose products are taxed at 5%, a rule change that takes effect on 1 November 2026 turns that ITC from money stuck in a ledger into money you can get refunded.

Which marketplace fees carry GST

Everything a marketplace charges you is a service it supplies to your business, and almost all of it is taxed at 18%:

Fee	GST	Claimable as ITC?
Commission / referral fee	18%	Yes
Closing fee, fixed fee, platform fee	18%	Yes
Fulfilment (FBA, Flipkart Assured), pick-pack, storage	18%	Yes
Advertising (sponsored listings)	18%	Yes, usually on a separate invoice
Collection / payment fee	18%	Yes
Shipping / logistics fee	18% so far, may change from 1 Nov 2026 (see below)	Yes, at whatever rate is charged

Meesho charges no commission, but its logistics and platform fees carry GST the same way. A worked example of how fees, GST on fees, TCS and TDS come out of one payout is in our settlement reconciliation guide.

The conditions: when fee GST is actually claimable

Section 16 of the CGST Act sets the conditions, and for marketplace fees they come down to four checks:

1. The invoice is issued to your GSTIN. Not your PAN, not a different state's registration.
2. It shows in your GSTR-2B. Since 2022 this is a hard condition, not a nice-to-have. Our GSTR-2A vs GSTR-2B guide explains why 2B is the one that counts.
3. The marketplace has filed and paid. For the big platforms this is a formality.
4. You claim it in time. The deadline is 30 November after the end of the financial year, or the date you file that year's GSTR-9 if earlier. For FY 2025-26 invoices that's 30 November 2026. See the ITC claim deadline guide.

Don't forget fee credit notes. When an order is returned or cancelled, marketplaces often refund part of the commission and issue a credit note. That reduces the ITC you can claim, so net it off in the same month.

Who can't claim it

Three groups of sellers pay GST on fees with no way to get it back:

• Unregistered sellers, including Meesho sellers using an Enrolment ID instead of a GSTIN. No GSTIN, no ITC.
• Composition sellers. Composition taxpayers can't claim ITC on anything.
• Sellers of exempt goods. If some of your products are exempt (unbranded staples, for example), the ITC on fees has to be split and the exempt share reversed under Rule 42.

If you're in one of these groups, treat fee GST as a cost and build it into your price. The Marketplace Profit Calculator shows what that does to your margin.

The 1 November 2026 change: refunds for sellers of 5% goods

After GST 2.0, a lot of what's sold online is taxed at 5%: apparel and footwear up to ₹2,500, many packaged foods, agarbattis. The marketplace still charges 18% on its fees. Sell at 5%, pay 18% on a big chunk of your costs, and ITC piles up faster than you can use it.

Here's a simplified month for an apparel seller where everything sold is at 5%:

	Amount
Sales (taxable value)	₹10,00,000
Output GST at 5%	₹50,000
ITC on stock bought at 5% (₹5 lakh)	₹25,000
ITC on marketplace fees at 18% (₹2 lakh)	₹36,000
Total ITC	₹61,000
ITC left over each month	₹11,000

That ₹11,000 is entirely from fees. Until now you couldn't get it back. The inverted-duty refund formula in Rule 89(5) counted only ITC on inputs (goods), not input services:

• Before: refund = (₹10 lakh × ₹25,000 ÷ ₹10 lakh) − ₹50,000 = nothing
• From 1 November 2026: refund = (₹10 lakh × ₹61,000 ÷ ₹10 lakh) − ₹50,000 = ₹11,000

The CGST Rules amendment notified on 26 October 2026 adds "eligible input services" to Net ITC, meaning input-service ITC availed on or after 1 November 2026. Credit you claimed before that date stays outside the formula, so whatever this seller built up before then isn't refundable under the new rule. It can still be used against future output GST. Blocked credits and Rule 42 reversals are excluded too.

Two practical points:

1. Refunds aren't automatic. You file a refund application (RFD-01) for the period. From 1 November 2026 the risk-based 90% provisional refund also covers inverted-duty claims. Our 90% provisional refund guide covers the process.
2. The real formula uses your actual turnover mix. If you also sell 18% products, only the 5% share counts as inverted. The example above assumes everything is at 5%.

If your electronic credit ledger has been growing every month since September 2025, this change is for you. More background on why it happens is in GST 2.0 and your ITC.

The shipping fee may change from 1 November

The 57th GST Council recommended, and a rate notification dated 27 October 2026 brings in from 1 November, a 5% rate without ITC for delivery services relating to goods sold through e-commerce platforms. Courier and postal services stay at 18%.

What we don't know yet is how each marketplace will classify the shipping or logistics line it bills you. Some may move it to 5%; others may treat it as courier and keep 18%. Industry bodies asked the government to delay the change, so check before assuming.

What matters for you:

• Look at the GST rate on your November fee invoice. Don't assume 18% in your books.
• The GST charged to you is still claimable. "Without ITC" restricts the delivery provider's own input credits, not yours.
• If shipping drops to 5%, your inverted-duty gap shrinks slightly, because less 18% GST flows into your ledger.

What to do this month

1. Download October's fee invoices from every marketplace, including the advertising invoice.
2. Match them against GSTR-2B and claim the GST in October's GSTR-3B (due 20 November; other dates are on the GST due dates calendar).
3. Before 30 November, sweep FY 2025-26 for any fee invoices you never claimed.
4. If you sell 5% goods, note your credit ledger balance on 1 November. ITC on fees from that date onward can go into an inverted-duty refund claim.
5. Check the shipping line on November's invoice when it arrives.

Want a CA to handle the refund claim? Share your details and a CA partner in our referral network will contact you with a quote. Dhanaay doesn't file anything itself, and sharing your details is free.

Sources (read 31 October 2026): Rule 89(5) input-services change, CGST (Amendment) Rules notified 26 October 2026, reported by EY and A2Z Taxcorp (sources differ on the notification number). Delivery services at 5% without ITC, Notification 06/2026-Central Tax (Rate) dated 27 October 2026, effective 1 November 2026; request for delay, MediaNama. Fee amounts in the examples are illustrative.