Payment Settlement

1. Payment Settlement

2. By completing this tutorial, you will be able to:
• Understand the eligibility for payment settlement
• Explain the settlement cycles
• Understand different components of your settlement amount
• Explain the payment settlement in different scenarios
• Describe Tax Deducted at Source (TDS)
Learning Objectives

3. You are eligible to receive payments if:
Eligibility for Payment Settlement
You are a registered
seller on Flipkart with a
verified bank account
Product is
shipped from the
first mother hub
You are at
the end of your
payment cycle
1 2 3

4. 7 business days
after the product is shipped*
PREPAID ORDERS POSTPAID ORDERS
Note: Sundays and Bank Holidays are not considered as business days.
Flipkart releases payment every
Monday, Wednesday, and Friday.
(There could be a delay in money
transfer based on your bank’s NEFT
settlement schedule.)
1 2
Settlement Cycles
Non-FA FA
14 business days
after the product is shipped*
12 business days
after the product is shipped*
Moving forward, the settlement cycle for both Tier 1 and Tier 2 sellers will be same.
*Shipped is the instance when a shipment is out-scanned at the first mother hub.

5. Settlement amount for an order is calculated on Total Order Item Value
Price paid by buyer
+
Flipkart’s discount share
(if any)*
Eligibility for Payment Settlement
a. Flipkart’s selling commission
b. Shipping / reverse shipping fee (depending on weight and zone)
c. Fixed closing fee. Know more about these fees from the Rate Card
Charges applicable to you on ‘Total Order Item Value’ are as follows:
Note: Taxes are separate from the Flipkart Fee
•Flipkart Discount Share is any promotional discount offer for which
the cost is borne by Flipkart.
1. Flipkart’s Fee
2. Applicable Service Tax
Total order Item value

6. Flipkart handles all your transactions in two separate accounts,
Prepaid account constitutes all settlements
related to orders for which the payment
mode is prepaid, i.e. through credit card,
debit card, EGV and net banking etc.
Prepaid
Settlements for orders in which the payment
mode is cash on delivery are made from
Postpaid account.
Additionally, any special settlements like
those for Seller Protection Fund (SPF), Tax
Deducted at Source (TDS)reimbursement,
Advertising services.
Postpaid
Payment Accounts

7. The values in below table indicate the balance in your individual account.
(Negative balance can be due to various reasons like customer returns, or seller cancellation fee.)
Date
Postpaid
Account(Rs.)
Prepaid
Account (Rs.)
06-Dec 5000 2000
06-Dec -1000 (returns) -5000 (returns)
Total 4000 -3000
Net Balance 1000
Settlement amount 4000
For the above period, the net amount that Flipkart
owes you is Rs.1,000 (4,000-3000). But, instead of
paying you Rs.1,000, Flipkart pays you Rs.4,000.
This is because Flipkart makes payments against
individual accounts only, independent of each
other. This means that you receive payment only
against your postpaid account and not prepaid
account, as the balance for prepaid account is
negative. So, you actually receive a settlement
amount which is different from what you had
expected.
Payment Settlements – Understanding the Method

8. Now, let us understand further how and when payment will be made to an account
in which the balance becomes negative.
Date Order value Balance Payment
01-Dec 5000 5000 -
03-Dec -1000 (returns) 0 -
07-Dec -2000 (returns) -2000 Nil - negative balance
10-Dec 1000 -1000 Nil - negative balance
12-Dec 1000 0 Nil - zero balance
15-Dec 2000 2000 2000
Total 2000 2000 2000
In this example, let us assume that the payment due
dates are Dec 7th
, 10th
, 12th
, and 15th
.
However, you will not receive any payment on
the first three dates because on the above
mentioned dates, your balance is either negative
or zero.
The balance finally becomes positive on Dec 15th
and therefore, you will receive the due amount
(Rs.2000) on Dec 15th
.
Remember that although the payment against a postpaid/prepaid account will be made only once the balance becomes positive, TDS
payments will keep happening irrespective of the balance in either of the accounts.
Payment Settlements – Understanding the Method

9. When an order is Shipped
The table below shows how a settlement is made for a shipped product.
Steps:
Order Item Order Item ID Order Date Order Status Order Item Value
(Rs.)
Settlement
Amount (Rs)
Settlement Date
OD41112200 ABC123 June 15, 2016 Shipped 5000 3885 June 22, 2016
Payment settlement - Shipped Order
We shipped the order from the
first mother hub (ABC123) whose
order item value is worth Rs.5000
Flipkart charges a Fee plus
Service Tax of Rs.1115 on the
Order Item Value
Flipkart transfers the net settlement
amount of Rs.3885 (Rs.5000 -
Rs.1115) to your bank account on
due date
1 2 3

10. When you cancel an order (Seller Cancellation)
Steps:
Payment Settlement – Cancellation
Order Item Order Item ID Order Date Order Status
Order item
Value (Rs.)
Settlement Amount (Rs.) Due Date
OD41112200 DEF123 Nov 11, 2014 Cancelled 5000 Depends on which order stage you
cancel the order*
Nov 17, 2014
Buyer
orders
DEF123
You cancel
the order
Price paid by
buyer is refunded
*Flipkart charges you a
Cancellation Fee (depending on
the cancellation slab in rate card)
When a buyer cancels an order (Buyer Cancellation)
Flipkart will not charge you any amount if a buyer cancels the order.
* Depends on seller cancelling the order before marking RTD or after marking RTD.

11. The table below shows how a settlement is made if an order is marked Return To Origin* (RTO)
Shipped RTO Net Result
Order Item value 5000 -5000 0
Commission fee (@8%) -400 400 0
Collection fee ( @ 2.5% ) -125 125 0
Fixed fee -30 30 0
Shipping Fee -50 50 0
Reverse
Shipping Fee
0
Total MP Fee -605 605 0
Service Tax -84.7 84.7 0
Swachh Bharat Cess@ 0.5% -3.02 3.02 0
Krishi Kalyan cess @ 0.5% -3.02 3.02 0
Settlement Amount 4304.25 -4304.25 0
• +ve figures imply money going into seller account, -ve
implies deduction from seller balance.
• A change of sign in consecutive steps indicates that
the settlement for that particular amount/fee has been
reversed.
• Service tax is calculated on the total Market Place fee
(Here it is taken as 15% (14% service tax + 0.5%
swachh bharat cess+ 0.5% krishi Kalyan cess) for
representative purpose
* RTO - when an order is returned to seller warehouse
due to delivery failure or courier return
Note: All figures are indicative and have been used for the purpose of illustration
Payment Settlement – Return To Origin (RTO)

12. The following example shows what happens when a customer returns a product.
Payment Settlement – Customer Return
Shipped Return
Order item value
Flipkart selling price
Shipping charge to buyer
Sub total
+ Rs 1000
+ Rs 30
+ Rs 1030 - Rs 1030 ( Refund to buyer)
Marketplace fee
Commission fee ( 17% for shirts )
Local shipping fee ( weight 400 gms)
Collection fee
Fixed fee
Reverse shipping fee
Sub Total
- Rs 175.10
- Rs 30
- Rs 25.75
- Rs 30
- Rs 260.85
+ Rs 200.48 (175.10+ 25.38*)
+ Rs 34.35 ( 30+ 4.35*)
- Rs 36
Tax Service Tax** (14.5% inc Swachh Bharat Cess 0.5 % ) - Rs 37.82 - Rs 5.22 ( On Reverse shipping fee)
Total deduction - Rs 298.67
Payment to seller Total Balance +Rs 731.32 - Rs 836.39
Net Payment for seller for this order: -Rs 105.07 ( Rs 731.32 - Rs 836.39)
* When we reverse the commission fee & fixed fee , we reverse it with the service tax which was charged in the 1st payment for respective
components
**A new tax, Krishi Kalyan Cess @ 0.5% will be added from 1st June, 2016

13. The following example shows what happens when a customer replaces a product
Payment Settlement – Customer Replacement
Shipped Return Replacement
Order item value
Flipkart selling price
Shipping charge to buyer
Sub total
+ Rs 1000
+ Rs 30
+ Rs 1030 - Rs 1030
+1030
Marketplace fee
Commission fee ( 17% for shirts )
Local shipping fee ( weight 400 gms)
Collection fee
Fixed fee
Reverse shipping fee
Sub Total
- Rs 175.10
- Rs 30
- Rs 25.75
- Rs 30
- Rs 260.85
+ Rs 200.48 (175.10+ 25.38*)
+ Rs 34.35 ( 30+ 4.35*)
- Rs 36
-175.10
-30
-30
Tax
Service Tax** (14.5% inc Swachh
Bharat Cess 0.5 % )
- Rs 37.82 - Rs 5.22 ( On Reverse
shipping fee)
34.08
Total deduction - Rs 298.67 296.18
Payment to seller Total Balance +Rs 731.32 - Rs 836.39 + 760.81
Net Payment for seller for this order: Rs 654.93 { ( 731.32 - 836.39) + 760.81}
* When we reverse the commission fee & fixed fee , we reverse it with the service tax which was charged in the 1st payment for respective
components
**A new tax, Krishi Kalyan Cess @ 0.5% will be added from 1st June, 2016

14. TDS is a method of tax collection paid by one entity paying income (deductor) to another entity
receiving the income (deductee).
Since, Flipkart already include the TDS in the commission, you are entitled to reimbursement from
Flipkart in case you pay TDS to the Government. So, to get that reimbursement you need to make a
TDS claim with Flipkart Internet.
The income received by Flipkart is characterised as commission income which means that the sum
payable by the seller will be subjected to taxes under Section 194C, 194H & 194I of the Act.
What is Tax Deducted at Source

15. TDS reimbursement process

16. The Seller Protection Program (SPP) uses the Seller Protection Fund (SPF) to safeguard you from incurring losses
under circumstances where you are not at fault.
Seller Protection Fund (SPF)
You must raise an SPF claim within 14 days of receiving an unfair return. You can also raise
the SPF claim if you have not received the return shipment post 60 days from the return
creation date.
You can claim for SPF when:
● You receive an empty or wrong shipment
● You receive a damaged shipment (provided the packaging in the forward leg is proper)
● The shipment is lost
● You do not have the Return shipment delivered to you within SLA
How to Claim SPF
1. Click 'Contact Seller Support' on top right of your seller portal.This will take you to the ‘Seller
Support Ticket Dashboard’ page.
2. Click on 'Create Ticket' on the right side of the page.
3. On the ‘Create Support Ticket’ page, select Issue Type as 'SPF Claims' from the drop down
menu.
4. Enter other details and click on ‘Submit’.

17. The commission invoice clearly lists down all the fees that
Flipkart charges you.
You can download invoices from
Payments > Invoices on your seller portal.
A sample commission invoice is shown on the right
Commission Invoice

18. In this tutorial, you learned about:
Summary
1. Eligibility for Payment Settlement
2. Settlement Cycles
3. Payment Accounts
4. Understanding the Method
5. Payment settlement - Dispatched Order
6. Payment Settlement – Cancellation
7. Payment Settlement – Return To Origin (RTO)
8. Payment Settlement – Customer Return
9. Payment Settlement – Customer Replacement
10. Tax Deducted at Source
11. Seller Protection Fund (SPF)
12. How to Claim SPF
13. Commission Invoice

19. Thank You