ONDC Seller Compliance Guide 2026: GST, TCS, TDS and Tax Rules

Selling Through ONDC? Understanding GST and Tax Compliance Is Essential for Long-Term Business Growth

Digital commerce in India has changed significantly with the rise of open network-based platforms. Businesses are no longer limited to traditional marketplaces, and sellers now have opportunities to reach customers through new digital ecosystems.

The Open Network for Digital Commerce (ONDC) has created a different approach to online selling where multiple participants, including buyer apps, seller apps, logistics providers, and sellers, work together through an open network model. Unlike traditional marketplaces where one platform manages the entire transaction journey, ONDC separates different functions among network participants.

For sellers, ONDC provides opportunities to expand their digital presence. However, selling through any online commerce network also brings important tax and compliance responsibilities.

Many sellers have questions such as:

• Is GST registration mandatory for ONDC sellers?
• Who collects GST TCS on ONDC transactions?
• Is TDS applicable on ONDC sales?
• Who issues invoices?
• How should sellers maintain records?
• What tax compliance mistakes should be avoided?

ONDC transactions can involve different business models, including marketplace, inventory, and aggregator structures. The tax responsibilities may vary depending on the role of participants, payment flow, and transaction structure. ONDC has issued tax guidance explaining how GST and income tax provisions may apply to different network scenarios.

For example:

A small clothing seller joins ONDC through a seller app and receives orders from customers through a buyer app.

The seller needs to understand:

• GST applicability.
• Invoice requirements.
• TCS treatment.
• Income tax reporting.
• Record maintenance.

This detailed guide explains ONDC seller compliance requirements in 2026, including GST rules, TCS, TDS, invoicing, taxation, and practical compliance steps.

Understanding ONDC Seller Model

ONDC is based on an open network structure where different participants perform different roles.

The key participants include:

• Buyer applications.
• Seller applications.
• Sellers.
• Logistics service providers.
• Other service providers.

A seller generally connects to ONDC through a seller network participant or seller application that helps manage:

• Product listing.
• Order processing.
• Customer interaction.
• Digital transactions.

This model differs from traditional e-commerce platforms where a single marketplace controls most activities.

For sellers, this means understanding not only sales but also the compliance responsibilities connected with their role.

Why ONDC Compliance Is Important for Sellers ?

Many small businesses join ONDC to increase online sales. However, digital selling requires proper tax and accounting management.

Incorrect compliance can create issues related to:

• GST filings.
• Tax reporting.
• Invoice records.
• TCS reconciliation.
• Income tax calculations.

For example:

A seller receives hundreds of ONDC orders every month but does not maintain proper sales records.

Later, during GST filing, the seller may face difficulty matching:

• Sales records.
• Payment received.
• Tax collected.

A proper compliance system helps sellers manage growth smoothly.

GST Registration Rules for ONDC Sellers

GST compliance depends on factors such as:

• Seller turnover.
• Nature of goods or services.
• State-wise supply.
• Applicable GST provisions.

Earlier, many online sellers believed GST registration was always mandatory for selling through e-commerce platforms.

However, GST rules have evolved, and certain eligible unregistered sellers may be allowed to sell through e-commerce operators subject to prescribed conditions. ONDC tax guidance also explains scenarios where unregistered sellers may supply through e-commerce operators while meeting specific requirements.

Businesses should evaluate:

• Turnover limits.
• Type of supplies.
• State-wise operations.
• Registration requirements.

For example:

A local seller operating within a state with turnover below the applicable threshold may need to evaluate whether enrolment-based options apply instead of regular GST registration.

GST Compliance for Registered ONDC Sellers

Sellers registered under GST need to manage regular GST compliance.

Important responsibilities include:

• Issuing GST-compliant invoices.
• Reporting sales correctly.
• Filing GST returns.
• Maintaining purchase records.
• Managing input tax credit.

For example:

A seller sells electronics products through ONDC.

The seller must maintain:

• Sales invoices.
• GST collected details.
• Purchase invoices.
• ITC records.

Proper GST management helps sellers avoid mismatches during reconciliation.

GST Invoice Requirements for ONDC Orders

A seller is generally responsible for issuing invoices for supplies made to customers, depending on the applicable transaction model. ONDC tax guidance explains that invoice responsibility can vary based on the role of participants and transaction structure.

A proper invoice should generally include:

• Seller details.
• GSTIN (if registered).
• Invoice number.
• Date of supply.
• Product/service details.
• Taxable value.
• GST amount.
• Customer details.

For example:

Invoice:

Product: Handmade Home Decor Item
Value: ₹5,000
GST: Applicable GST amount
Total Invoice Value: ₹5,900

Maintaining accurate invoices is important for:

• GST filing.
• Accounting.
• Customer records.

Understanding GST TCS on ONDC Transactions

Tax Collection at Source (TCS) under GST is an important compliance area for e-commerce transactions.

The applicability of GST TCS depends on factors such as:

• Who collects payment.
• Business model.
• Role of e-commerce operator.

ONDC transactions may involve different scenarios because the network separates buyer apps, seller apps, and other participants. ONDC guidance explains that GST TCS obligations can vary depending on transaction structure and payment collection arrangements.

For example:

If an e-commerce operator collects consideration for supplies made through the network, GST TCS provisions may become applicable according to the relevant rules.

Sellers should reconcile:

• Sales amount.
• TCS collected.
• TCS reflected in records.

TDS Rules for ONDC Sellers Under Section 194-O

Apart from GST compliance, ONDC sellers also need to understand income tax provisions related to e-commerce transactions.

One important provision is Section 194-O of the Income Tax Act, which requires e-commerce operators to deduct TDS on certain transactions facilitated through their platforms.

Under ONDC, the applicability of TDS depends on factors such as:

• Nature of transaction.
• Role of buyer app and seller app.
• Who facilitates the transaction.
• Seller category.
• Payment flow.

ONDC tax guidance explains that Section 194-O may apply to transactions where sellers provide goods or services through the ONDC network, and the responsibility for deduction depends on the role of the e-commerce operator involved in the transaction.

For example:

A seller sells products through an ONDC seller application.

The buyer places an order through a buyer application.

Depending on the transaction structure, the applicable e-commerce operator may need to deduct TDS under Section 194-O.

Understanding Section 194-O for ONDC Transactions

Section 194-O was introduced to bring online marketplace transactions under a structured tax deduction framework.

The objective is to ensure that income generated through digital platforms is properly reported.

For ONDC sellers, important points include:

• TDS may be deducted by the applicable e-commerce operator.
• Sellers should provide PAN details.
• TDS credit can generally be claimed while filing income tax returns.

For example:

A seller receives ₹10 lakh in sales through ONDC.

The applicable e-commerce operator deducts TDS as per the applicable provisions.

The seller can claim credit for this TDS while calculating final income tax liability.

GST TCS Compliance for ONDC Sellers

Tax Collection at Source (TCS) under GST is another important compliance area for ONDC transactions.

Under GST law, e-commerce operators may be required to collect TCS on taxable supplies made through their platform when the consideration is collected by the operator.

ONDC transactions require careful evaluation because multiple participants may be involved, including buyer apps and seller apps.

ONDC tax guidance explains that GST TCS applicability depends on factors such as:

• Business model.
• Who collects payment.
• Whether the seller app or buyer app acts as the e-commerce operator.
• Nature of supply.

For example:

A customer pays for a product through a network participant that collects the payment.

The applicable e-commerce operator may need to collect GST TCS according to the transaction structure.

GST TCS Rate for ONDC Transactions

Where GST TCS provisions apply, the collection rate is generally:

• 1% under IGST, or
• 0.5% CGST + 0.5% SGST/UTGST for intra-state supplies.

GST TCS is collected on the net value of taxable supplies made through the e-commerce operator.

For example:

Product value: ₹10,000
GST: ₹1,800

TCS calculation is generally considered on the taxable supply value and not the GST component.

How ONDC Sellers Should Manage TCS Reconciliation

Sellers should regularly reconcile:

• Total ONDC sales.
• TCS collected.
• GST returns.
• Accounting records.

A mismatch between platform reports and GST records can create issues during filing.

For example:

ONDC sales according to seller records:

₹20 lakh

Platform-reported sales:

₹19.5 lakh

TCS reflected:

Different amount

The seller should identify and correct the mismatch before filing returns.

Income Tax Rules for ONDC Sellers

Apart from GST, ONDC sellers need to comply with income tax requirements.

Income tax compliance depends on factors such as:

• Business structure.
• Revenue earned.
• Profit margins.
• Expenses.
• Applicable tax provisions.

Sellers should maintain proper records of:

• Sales income.
• Purchase expenses.
• Platform fees.
• Logistics charges.
• Marketing expenses.

For example:

A seller earns ₹50 lakh through ONDC.

Expenses include:

• Product purchases.
• Packaging costs.
• Logistics charges.
• Platform charges.

The seller should maintain proper accounting records to calculate taxable income correctly.

Accounting Requirements for ONDC Sellers

Proper bookkeeping becomes extremely important for online sellers.

Businesses should maintain:

• Sales invoices.
• Purchase invoices.
• Payment settlement reports.
• TCS certificates.
• GST records.
• Expense details.

This helps with:

• GST return filing.
• Income tax filing.
• Business analysis.

For example:

An ONDC seller receives multiple daily orders.

Without proper accounting software, tracking:

• Revenue.
• Expenses.
• Taxes.
• Profit margins

can become difficult.

Input Tax Credit Management for ONDC Sellers

GST-registered ONDC sellers can claim input tax credit on eligible business purchases subject to GST rules.

Common ITC-eligible expenses may include:

• Inventory purchases.
• Packaging material.
• Business services.
• Logistics-related expenses.

However, sellers should ensure:

• Valid GST invoices are available.
• Supplier details are correct.
• Expenses relate to business activities.

Incorrect ITC claims can create compliance problems.

Impact on Small Sellers and MSMEs

ONDC has created opportunities for small businesses to access online customers without depending only on traditional marketplaces.

However, small sellers often face challenges such as:

• Understanding GST rules.
• Managing invoices.
• Tracking TCS and TDS.
• Maintaining accounts.

For example:

A local handicraft seller joins ONDC to increase sales.

Initially, the seller manages orders manually.

As sales increase, proper accounting and tax systems become necessary.

Common ONDC Compliance Mistakes Sellers Should Avoid

Not Maintaining Sales Records

Online sales should always be properly recorded.

Ignoring TCS and TDS Details

Sellers should regularly check tax deductions reflected in their accounts.

Incorrect GST Filing

Sales through ONDC should match GST return reporting.

Poor Invoice Management

Missing invoices can create problems during audits.

Not Tracking Platform Charges

Seller fees and commissions should be properly recorded.

ONDC Seller Compliance Checklist for 2026

Selling through ONDC provides businesses with new digital growth opportunities, but sellers must maintain proper tax and accounting systems to manage increasing online transactions.

Since ONDC follows an open network model involving multiple participants, sellers should understand their role and maintain compliance accordingly. ONDC tax guidance explains that GST and income tax responsibilities can vary depending on factors such as seller model, payment collection mechanism, and the role of different network participants.

A practical compliance checklist for ONDC sellers includes:

Following a structured approach helps sellers avoid tax errors while scaling their online business.

How ONDC Sellers Can Maintain GST Compliance

GST compliance is one of the most important areas for online sellers.

Businesses should regularly review:

• GST registration status.
• Product tax rates.
• HSN codes.
• Sales reporting.
• Input tax credit records.

For example:

A seller sells multiple product categories through ONDC.

Some products attract different GST rates.

The seller must ensure:

• Correct GST classification.
• Correct invoice generation.
• Accurate GST return reporting.

Incorrect GST reporting can result in:

• Tax mismatches.
• Notices.
• Additional compliance burden.

Importance of TCS Reconciliation for ONDC Sellers

Sellers should regularly compare:

• ONDC order reports.
• Payment settlements.
• GST TCS credits.
• Accounting records.

GST TCS obligations depend on the transaction model and the role of the electronic commerce operator involved. ONDC guidance provides scenario-based explanations for GST TCS applicability across different network models.

For example:

Seller sales through ONDC:

₹15 lakh

Amount received after deductions:

₹14.85 lakh

The seller should reconcile:

• Sales value.
• Commission charges.
• TCS amount.
• Net settlement.

This helps avoid differences during GST filing.

Managing TDS Credits From ONDC Transactions

ONDC sellers should track TDS deducted under applicable income tax provisions.

TDS deducted by the relevant e-commerce operator can generally be claimed as credit while filing income tax returns, subject to applicable conditions.

Sellers should maintain:

• TDS certificates.
• Transaction reports.
• PAN details.
• Income records.

For example:

A seller earns ₹20 lakh through ONDC.

TDS is deducted on eligible transactions.

The seller should ensure the deducted amount appears correctly in tax records.

Accounting Practices Every ONDC Seller Should Follow

Online businesses often fail to maintain proper accounts because sales happen digitally and payments are received after multiple deductions.

Sellers should maintain records of:

• Gross sales.
• Product purchases.
• ONDC commissions.
• Delivery charges.
• Packaging expenses.
• Advertising costs.
• Refunds and cancellations.

For example:

An ONDC seller receives:

Total customer orders: ₹10 lakh

Expenses:

• Product cost: ₹5 lakh
• Packaging: ₹20,000
• Delivery charges: ₹50,000
• Platform charges: ₹30,000

Proper accounting helps calculate actual business profit.

Impact of ONDC Compliance on MSMEs and Small Businesses

ONDC has opened digital selling opportunities for many small businesses.

Small sellers such as:

• Local retailers.
• Home-based businesses.
• Handicraft sellers.
• Food businesses.
• Small manufacturers.

can access online customers without depending only on large marketplaces.

However, growth also requires proper compliance management.

For example:

A home-based seller starts selling handmade products through ONDC.

Initially, sales are small.

After six months, orders increase significantly.

The seller now needs:

• Proper invoicing.
• GST understanding.
• Accounting records.
• Tax planning.

Common ONDC Compliance Mistakes Sellers Should Avoid

Ignoring GST Rules

Many sellers focus only on sales and ignore GST requirements.

This can create issues during return filing.

Not Tracking Platform Deductions

Seller settlements often include:

• Commission.
• Logistics charges.
• Other deductions.

These should be properly recorded.

Not Maintaining Purchase Invoices

Without purchase invoices, sellers may lose eligible ITC benefits.

Not Checking Tax Credits

Sellers should verify:

• GST TCS credits.
• Income tax TDS credits.

Mixing Personal and Business Transactions

Separate business banking and accounting practices help maintain clean records.

Practical Example: ONDC Seller Compliance Management

A small electronics seller joins ONDC.

Monthly sales:

₹8 lakh

The seller receives orders through a seller application connected with the ONDC network.

The seller manages compliance by:

• Issuing GST invoices.
• Tracking product purchases.
• Reconciling settlements.
• Reviewing TCS details.
• Maintaining income records.

As the business grows, proper compliance systems help avoid tax-related problems.

Future of ONDC Seller Compliance

The digital commerce ecosystem in India is expected to continue expanding.

For sellers, future success will depend not only on product quality but also on:

• Accurate tax management.
• Digital accounting.
• Compliance awareness.
• Financial planning.

Businesses that build compliance systems early can scale more efficiently.

Frequently Asked Questions (FAQs)

1. Is GST registration compulsory for every ONDC seller?

GST requirements depend on factors such as turnover, business category, and applicable GST provisions.

2. Do ONDC sellers need to issue invoices?

Yes, sellers should maintain proper invoices according to applicable tax requirements.

3. What is GST TCS in ONDC transactions?

GST TCS is a tax collection mechanism applicable in certain e-commerce transactions depending on the role of the electronic commerce operator.

4. Is TDS deducted on ONDC sales?

TDS under Section 194-O may apply depending on transaction structure and the role of the e-commerce operator.

5. Can ONDC sellers claim TDS credit?

Yes, eligible sellers can generally claim TDS credit while filing income tax returns.

6. Can small businesses sell through ONDC?

Yes, ONDC enables businesses of different sizes to participate in digital commerce.

7. Should ONDC sellers maintain accounting records?

Yes, proper accounting is important for GST filing, income tax compliance, and business planning.

8. Can ONDC sellers claim input tax credit?

GST-registered sellers may claim eligible ITC subject to GST conditions.

9. What records should ONDC sellers maintain?

Important records include:

• Sales invoices.
• Purchase invoices.
• Payment reports.
• Tax records.

10. Can compliance professionals help ONDC sellers?

Yes, professional support can help sellers manage GST, tax filing, accounting, and compliance requirements.

Need Help With ONDC GST and Tax Compliance?

Managing online sales compliance requires accurate invoicing, proper accounting, and understanding of GST and tax regulations.

At FilingSuvidha, we assist businesses with complete compliance solutions.

Our services include:

✔ GST Registration & Compliance
✔ GST Return Filing Support
✔ E-commerce Tax Compliance
✔ TDS & TCS Compliance Support
✔ Accounting & Bookkeeping Services
✔ Business Compliance Solutions

Need help managing ONDC sales, GST compliance, or tax requirements? Connect with FilingSuvidha experts for professional guidance.

Contact FilingSuvidha

📧 Email: info@filingsuvidha.com
🌐 Website: https://filingsuvidha.com/
📞 Contact: +91-9625995981