GST reconciliation for retail, e-commerce & FMCG.

A brand selling across Amazon, Flipkart, its own D2C site and modern-trade distributors runs tens of thousands of transactions a month — orders, returns, replacements, samples, promotional discounts. Each marketplace collects tax on your behalf, each return spawns a credit note, and each free unit is a blocked-ITC event. GST reconciliation here is a volume problem before it is a rules problem — and both have to be solved at once.

1. Marketplace TCS vs GSTR-8

When you sell through an e-commerce operator, the operator collects Tax Collected at Source under Section 52 on the net taxable value of supplies made through it, and reports it in FORM GSTR-8. That TCS then appears in your electronic cash ledger for you to accept and use. The current rate is 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST), reduced from 1% with effect from 10 July 2024 (Notification 15/2024-Central Tax for CGST, with the corresponding Integrated Tax notification for IGST).

The reconciliation is between three things that rarely agree: your own sales register, the operator's settlement/MTR report, and the GSTR-8 the operator files. A mismatch means either TCS you have not claimed (money sitting in the cash ledger) or a sales figure the operator reported differently from your books — which can invite a query. Across several marketplaces, each with its own report format, this is a monthly grind. Recoup pulls the cash-ledger TCS credit and matches it back to marketplace sales so nothing goes unclaimed and nothing is over-claimed.

2. High credit-note and returns volume — Section 34 and IMS

Returns are a fact of retail life, and every one may need a credit note under Section 34. The rule that trips teams up: a supplier can reduce output tax liability against a credit note only if the recipient has correspondingly reduced its ITC — otherwise the reduction is not allowed. With the Invoice Management System (IMS), this is now explicit and two-sided: credit notes flow to the recipient's IMS dashboard, and how the recipient acts on them (accept, reject, keep pending) directly affects whether your liability reduction stands.

At high volume, both sides matter. As a seller, you need every credit note to actually land and be accepted so your liability drops. As a buyer (from your distributors and suppliers), you need to act on inbound credit notes correctly, because a wrongly rejected credit note keeps a liability alive and a wrongly accepted one reverses credit you were entitled to. Recoup reconciles the credit-note population on both sides and flags the ones stuck in IMS limbo.

3. Free samples and write-offs — blocked under 17(5)(h)

FMCG runs on sampling, trade schemes and shrinkage, and Section 17(5)(h) blocks ITC on goods lost, stolen, destroyed, written off, or disposed of by way of gift or free samples. The GST you paid on inputs that went into a free sample or a written-off batch is not recoverable, and if you already claimed it, it must be reversed. CBIC's Circular 92/11/2019 confirms that free samples and gifts fall outside "supply" and carry this ITC bar (with a distinct treatment for genuine buy-one-get-one offers, where the "free" unit is priced into the bundle).

The reconciliation task is to identify sample and write-off movements in your inventory and books and reverse exactly the ITC attributable to them — no more, no less. Miss it and you carry ineligible credit; over-reverse and you leak eligible credit. Recoup flags sample/write-off lines so the reversal is precise.

4. Post-sale discounts — Section 15(3)(b)

Secondary and post-sale discounts are endemic in distribution, and their GST treatment is exacting. To reduce the taxable value for a discount given after supply, Section 15(3)(b) requires that the discount be established by an agreement entered into before or at the time of the supply, be linked to relevant invoices, and that the recipient reverse the ITC attributable to the discount (Section 15(3)(b)(ii)). CBIC had earlier prescribed, in Circular 212/6/2024 (26 June 2024), a procedure for the supplier to evidence that reversal through certificates or undertakings from recipients — but that circular was withdrawn by Circular 253/10/2025 (1 October 2025), so no separate certificate or undertaking is now mandated. The underlying statutory condition — that the recipient actually reverse the proportionate ITC — still stands.

For a brand issuing hundreds of discount credit notes to distributors, ensuring each qualifying discount is backed by a pre-supply agreement and that recipients have in fact reversed the proportionate ITC remains a genuine compliance burden — and the exposure is your own liability if the discount is later disallowed. Recoup ties each discount credit note to its recipient so the position is documented.

5. IMS deemed-acceptance risk at high invoice count

Under the Invoice Management System, an inbound invoice that you do not explicitly reject or keep pending is deemed accepted when your GSTR-2B is generated — and flows into your ITC. For a high-volume buyer receiving tens of thousands of invoices, "do nothing" is not neutral: it silently pulls every unreviewed invoice, including erroneous, duplicate, or ineligible ones, into your credit. The safe posture inverts the manual habit — you can no longer afford to review only the exceptions by hand, because inaction now has a default consequence.

This is precisely where automation earns its place. Recoup reviews the full IMS population against your books, recommends accept / reject / pending per invoice, and surfaces the handful that genuinely need a human decision — so deemed acceptance never carries in credit you would not have claimed on purpose.

What Recoup does for a retail / FMCG finance team

• Tri-source match — bank, Zoho Books / Tally and the GST portal (GSTR-2B / IMS) reconciled invoice by invoice, so a settlement, its TCS and its 2B line are seen together.
• TCS reconciliation — cash-ledger TCS matched back to marketplace sales across every operator, so nothing sits unclaimed.
• Credit-note tracking — return and discount credit notes followed through IMS on both the sell and buy side, flagging those stuck in limbo.
• Blocked-credit tagging — free samples and write-offs surfaced for precise Section 17(5)(h) reversal.
• IMS control — the full inbound population reviewed against books with an accept / reject / pending recommendation per invoice, so deemed acceptance never carries in credit you didn't intend.