-01%201.svg)
Key takeaways
- Clean payment gateway integration sends real time, tax coded transaction data into your books, your team stops wrestling with spreadsheets.
- Always book gross revenue, fees, taxes, and net settlement separately, use clearing accounts per gateway and currency for traceability.
- Automate three tier reconciliation, gateway events to settlements to bank, with exception queues and audit logs.
- Capture GST on gateway fees for input tax credit, watch B2B e invoicing thresholds, and model TDS or TCS as applicable.
- Use APIs, webhooks, SFTP, or middleware, add idempotency and deduplication, test thoroughly before go live.
- AI Accountant provides a CA led managed service, with dashboards, GST and TDS workflows, and monthly close discipline.
Table of contents
Payment gateway integration for accounting in India A complete guide for startups and SMBs
Introduction to payment gateway integration for accounting
Payment gateway integration for accounting sends clean transaction data from gateways to your books in real time, connecting platforms like Razorpay, PayU, Cashfree, Paytm, PhonePe, or Stripe to accounting systems like Tally or Zoho Books. This removes tedious manual matching, finds hidden fees, improves GST and TDS compliance, and speeds up month end close for Indian startups and SMBs that sell online.
When this is done right, your team stops wrestling with spreadsheets, your books show gross revenue, fees, net settlements, and tax in the right ledgers, and your dashboard updates fast. Your CA and auditor get a proper trail.
You get a simple blueprint for India specific tax rules, data flow, chart of accounts, reconciliations, journal entries, and controls, plus how AI Accountant makes setup easy with a CA led managed service and a live dashboard.
Read more on the AI Accountant blog for context and examples, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
What is payment gateway integration for accounting
Payment gateway integration for accounting is a bridge that pulls payment events into your books, it captures orders, payments, refunds, chargebacks, fees, GST on fees, and settlements, then links each event to the right ledgers with proper tax coding and timestamps.
Key data it brings in
- Order ID and payment ID
- Customer name and contact
- Product or plan details with HSN or SAC
- Taxes like CGST, SGST, IGST
- Fees like MDR or convenience fee with GST
- Net settlement to bank
- Date and time, currency, and status
This data then lands in Tally, Zoho Books, QuickBooks, or Xero with clean audit trails, you get MIS reports that match your gateway dashboard, and your CA can track exceptions and fix them early.
References, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://www.erpca.com/blog/2024/08/31/integration-with-payment-gateways-for-easy-transactions/, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/.
Benefits of payment gateway integration for accounting
The benefits are practical and felt every day by finance teams.
- Less manual entry and less copy paste
- Faster month end and fewer errors
- Clean revenue recognition at gross level
- Correct fee capture and GST input credit on gateway invoices
- Better TDS accuracy where it applies
- Clear audit trail for your CA and auditor
- Live view of cash flow and days sales outstanding
- Strong visibility on refunds and chargebacks
- Handles big UPI spikes during festivals without chaos
These gains show up in time saved, fewer breaks in reconciliation, and fewer late filings, see, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://www.erpca.com/blog/2024/08/31/integration-with-payment-gateways-for-easy-transactions/, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/.
Architecture overview for payment gateway integration for accounting
Let us keep the flow simple.
- A customer pays through the gateway
- The gateway records a payment event with fees and taxes
- The settlement file comes on T plus one or T plus two
- Money hits your bank in a batch
- Your books auto reconcile payments, fees, and bank entries
Ways to move data
- API integration for pull and push
- Webhooks for event notifications
- SFTP or CSV exports for batch load
- Middleware if you want a managed bridge
Good controls to add
- Idempotency to avoid duplicate entries
- Deduplication for retries and partials
- Clear error handling with exception queues
- Audit logs for every change
Data fields to capture
- Order and payment IDs
- Customer details
- Tax components
- Fees and GST on fees
- Net settlement amount
- Timestamp and currency
More reading, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/, https://www.kosh.ai/blog/how-to-do-payment-gateway-reconciliation-a-step-by-step-guide, https://dev.to/shridhar_itolikar_3371c61/integrating-a-payment-gateway-in-india-a-2025-developers-guide-47ik.
Chart of accounts for payment gateway integration for accounting
A strong chart of accounts keeps the books tidy, use these groups.
- Sales accounts
Create separate sales accounts by product, HSN or SAC, this helps GSTR one mapping and MIS. - Tax output accounts
Keep CGST, SGST, and IGST accounts distinct, link to e invoicing if the B2B threshold applies. - Clearing accounts
Create one clearing account per gateway and per currency, example Razorpay Clearing INR and Stripe Clearing USD, this makes traceability easy. - Fees accounts
Separate MDR, convenience fees, dispute fees, and chargeback fees, record GST on fees to claim input credit. - Refunds and chargebacks
Decide on contra entries or provision accounts for chargebacks, for foreign currency, add FX revaluation accounts for gain or loss.
Reference, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Reconciliation playbook for payment gateway integration for accounting
Make reconciliation routine and layered, use three levels.
Level one
- Match orders to gateway payments
- Track success, pending, and failed
- Use exception queues for mismatches
Level two
- Match gateway ledger entries to settlement files
- Handle T plus one or T plus two timing and any reserves
Level three
- Match settlements to bank statements
- Investigate timing differences quickly
Refunds and chargebacks
- Decide whether to net off refunds against sales or to post gross reversals with contra entries
- For chargebacks, create a provision and reverse it when resolved
Cadence
- Daily exception review
- Weekly partial reconciliation
- Monthly full reconciliation
- A dashboard that shows breaks and aging
Helpful guides, https://www.kosh.ai/blog/how-to-do-payment-gateway-reconciliation-a-step-by-step-guide, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, and bank matching tips, https://www.aiaccountant.com/blog/bank-statement-analysis-accounting.
India tax and compliance for payment gateway integration for accounting
India has some specific rules to watch.
- GST on fees
Gateways charge GST on fees, capture it and claim input tax credit, reconcile it with GSTR two A and vendor invoices, see, https://www.aiaccountant.com/blog/gst-compliance-services-india. - E invoicing for B2B
E invoicing becomes mandatory once your B2B turnover crosses a set limit, the current common trigger is five crore, get IRN for eligible supplies like digital services. - GSTR one and three B
Map HSN or SAC codes and place of supply for SaaS and e commerce, separate intra state and inter state tax correctly. - TDS and TCS
TDS under section one nine four O can apply to certain aggregator models, get CA advice, track Form twenty six Q, twenty four Q challans. - Annual GST
GSTR nine and nine C need clean data, for exports use LUT or IGST and keep FIRC for foreign receipts.
A good setup lowers the risk of notices and penalties, more context, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Journal entries for payment gateway integration for accounting
Here are simple patterns, numbers are for example.
- On payment success
Debit Customer Receivable rupees ten thousand five hundred thirty, credit Sales rupees ten thousand, credit Output GST rupees five hundred thirty. - On MDR fee recognition
Debit Payment Gateway Fees Expense rupees two hundred, debit Input GST rupees thirty six, credit Payment Gateway Clearing rupees two hundred thirty six. - On net settlement into bank
Debit Bank rupees nine thousand seven hundred ninety four, credit Payment Gateway Clearing rupees nine thousand seven hundred ninety four. - On refunds or chargebacks
Reverse the sales and GST for the refunded amount, for chargebacks, debit a chargeback expense or provision and clear it on final resolution. - On foreign currency revaluation
Post gain or loss to FX revaluation accounts based on current rate versus original rate.
Patterns and checks, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
E commerce vs SaaS nuances in payment gateway integration for accounting
E commerce and SaaS have different wrinkles.
For e commerce
- High volume and many SKUs to map
- Refunds due to return to origin and order cancellations
- Coupons and discounts often treated as marketing contra entries
For SaaS
- Subscriptions with dunning and payment retries
- Proration on plan changes and mid cycle adjustments
- Usage based billing that needs clean time stamps
Set rules for each model so that revenue, refunds, discounts, and taxes stay consistent, see, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Multi gateway and multi currency setup for payment gateway integration for accounting
Many startups use more than one gateway, some also collect in foreign currency.
- Use a separate clearing account for every gateway and for every currency
- Standardize order IDs across systems to make cross matching easier
- Convert foreign currency at the rate on the transaction date
- Revalue balances monthly for FX gain or loss
- Benchmark success rates and fees as a percent of GMV for each gateway
This view lets you compare cost and performance and spot issues fast, references, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://dev.to/shridhar_itolikar_3371c61/integrating-a-payment-gateway-in-india-a-2025-developers-guide-47ik.
Metrics and dashboards for payment gateway integration for accounting
Good metrics turn raw data into action.
- Gateway success rate and conversion rate
- Fees as a percent of GMV across gateways
- Refund and chargeback percentage
- Clearing account aging and settlement turn around time
- GST input credit utilization
- TDS variances against expected
- Cash runway impact based on net inflows
Dashboards that show these in real time help founders and finance heads make quick decisions, more, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Implementation steps for payment gateway integration for accounting
A simple project plan keeps the rollout smooth.
- Discovery
Map all gateways, payment methods, volume, and currencies, confirm merchant accounts and KYC. - Design
Finalize chart of accounts and tax mappings, choose API or webhook or middleware routes, define SOPs and controls. - Build
Set up the pipeline and test, load a small set of historical data to pilot, validate against gateway dashboards. - Go live
Do a parallel run, train the team, publish SOPs and audit checklists, monitor exceptions closely in the first month.
Further reading, https://www.aiaccountant.com/blog/simplified-accounting-for-startups-india, external perspectives, https://appinventiv.com/blog/payment-gateway-integration/, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/, https://www.erpca.com/blog/2024/08/31/integration-with-payment-gateways-for-easy-transactions/, https://sabpaisa.in/blog/a-complete-guide-to-payment-gateway-integration-for-businesses/, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://dev.to/shridhar_itolikar_3371c61/integrating-a-payment-gateway-in-india-a-2025-developers-guide-47ik.
Common pitfalls and fixes in payment gateway integration for accounting
Avoid these traps.
- Recording net settlements as revenue
Always book gross revenue and separate fees, this improves tax accuracy and KPI clarity. - One clearing account for all gateways
Use a clearing account per gateway and per currency, it helps trace issues and speeds audits. - Missing GST input credit on fees
Pull GST on fees and reconcile with GSTR two A to avoid ITC leakage. - Skipping bank reconciliation
Automate the three levels including bank matching, build exception queues. - No ownership for exceptions
Create queues with owners and SLAs, close loops quickly.
Deep dive, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, and reconciliation tips, https://www.kosh.ai/blog/how-to-do-payment-gateway-reconciliation-a-step-by-step-guide.
Security and governance for payment gateway integration for accounting
Finance data needs strong care.
- Manage API keys with role based access control
- Keep audit logs for all data pulls and posts
- Handle personal data with consent and privacy controls
- Review vendor SLAs for data uptime and support
- Use PCI DSS compliant hosted pages where applicable
- Limit who can change mappings and tax rules
Guidance and checklists, https://appinventiv.com/blog/payment-gateway-integration/, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/, https://dev.to/shridhar_itolikar_3371c61/integrating-a-payment-gateway-in-india-a-2025-developers-guide-47ik.
Tools and integration options for payment gateway integration for accounting
Gateways commonly used
- Razorpay
- PayU
- Cashfree
- Stripe
- Paytm
- PhonePe
Accounting and finance tools to connect
- AI Accountant https://aiaccountant.com
- Tally
- Zoho Books
- QuickBooks
- Xero
Connector options
- Pre built connectors from gateways and vendors
- Custom API or webhook based integrations
- AI driven categorization and anomaly detection for exceptions
Choose the mix that fits your volume and control needs, make sure you always test with sample data before live use, references, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://tallysolutions.com/business-guides/integrate-payment-gateway-with-business-software/, https://dev.to/shridhar_itolikar_3371c61/integrating-a-payment-gateway-in-india-a-2025-developers-guide-47ik.
How AI Accountant helps with payment gateway integration for accounting
AI Accountant provides a CA led managed service plus a live dashboard, the team sets up chart of accounts, tax mappings, and SOPs, implements API or webhook connections, and runs monthly bookkeeping and reconciliation across gateway ledgers, settlement files, and bank statements.
AI Accountant also handles GST filings like GSTR one, three B, nine and nine C, supports e invoicing, input tax credit tracking, and TDS advisory and compliance including forms twenty six Q, twenty four Q, twenty seven Q, and challans, for small companies they support ROC filings as well.
The dashboard gives founders and finance leads a single place to view revenue, expenses, cash flow, clearing aging, fees, and exceptions, AI insights flag GST or TDS issues, fee spikes, and settlement delays, it is built for startups and SMBs that want clean books without a heavy in house setup.
Learn more, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Quick checklist for payment gateway integration for accounting
Pre integration
- List all gateways and payment methods
- Ensure merchant accounts are live and KYC complete
Chart of accounts and tax
- Map HSN and SAC
- Create clearing accounts per gateway and currency
- Set tax rules for CGST, SGST, IGST
- Capture GST on fees for input credit
Routines
- Daily exception review
- Weekly partial reconciliation
- Monthly full reconciliation
Compliance
- Reconcile GST on fees and claim ITC
- Post TDS challans on schedule
- Check e invoicing thresholds and apply when needed
Exceptions
- Maintain a queue with owners, SLAs, and SOPs
- Audit logs for every fix
Reference materials, https://appinventiv.com/blog/payment-gateway-integration/, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india, https://www.kosh.ai/blog/how-to-do-payment-gateway-reconciliation-a-step-by-step-guide.
Internal links for payment gateway integration for accounting
- GST for SaaS and e commerce, https://www.aiaccountant.com/gst-saas-ecom
- E invoicing guide, https://www.aiaccountant.com/e-invoicing
- Reconciliation best practices, https://www.aiaccountant.com/reconciliation
- TDS on payments, https://www.aiaccountant.com/tds-payments
Call to action for payment gateway integration for accounting
Book a demo of AI Accountant Virtual Accounting, we will help you implement payment gateway integration for accounting, automate reconciliations, and stay compliant on GST and TDS, you get a CA led team and a live dashboard that shows what is happening in your finances today, visit, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
Compliance note for payment gateway integration for accounting
This article is for information only, rules can change and your facts may be unique, please consult a CA for a tailored setup, the AI Accountant team is happy to advise for your business, see, https://www.aiaccountant.com/blog/payment-gateway-integration-accounting-india.
FAQs on payment gateway integration for accounting
For a startup on Tally, what is the most reliable way to ingest Razorpay or PayU data so ledgers and GST are correct
Use gateway APIs and webhooks to stream payment events into a middleware, or a connector that posts into Tally with idempotency, then apply mappings for CGST, SGST, IGST based on place of supply, AI Accountant, as an AI enabled Virtual Accounting service, can pre configure these mappings, validate sample runs, and maintain exception queues.
How should refunds, partial captures, and chargebacks be journaled so gross sales and GST remain accurate
Record gross sale on capture, for a refund, post a gross reversal of Sales and Output GST with a link to the original payment ID, for chargebacks, debit a Chargeback Provision on dispute and reverse on resolution, this keeps visibility on refunds versus disputes and sustains clean GST reporting.
We run multiple gateways and currencies, how do we avoid breakages in reconciliation at month end
Create clearing accounts per gateway and per currency, standardize order IDs across systems, revalue FX balances monthly, and implement three level reconciliation, gateway events to settlement statements to bank, AI Accountant can automate this cadence, flag breaks, and produce an audit log for your CA.
What controls should a finance head insist on before approving go live for gateway integration
Insist on idempotent posting, deduplication for retries, strict error handling and exception queues, audit logs for all changes, and maker checker for tax mappings, run a parallel trial for one cycle, reconcile differences, then approve, this reduces rework and notices.
How do we capture GST on MDR and convenience fees, and ensure ITC is claimed correctly in three B
Pull fee GST from gateway invoices or settlement statements, post to Input GST with vendor linkage, reconcile with GSTR two A, and adjust for any mismatches, AI Accountant’s workflow pairs vendor invoices to ledger entries so ITC is not missed, and supports monthly three B filing.
Is e invoicing required for B2C online sales, and what is the B2B threshold we should watch
E invoicing is not required for B2C, for B2B, once your turnover crosses the current threshold, common trigger is five crore, you must generate IRN for eligible supplies, configure your system to publish e invoices automatically for B2B customers with correct SAC and place of supply.
How do we treat coupons, cashbacks, and promotional credits in the books for an e commerce store
Treat coupons and promotional credits as marketing contra entries rather than netting sales, post gross sales, then debit Marketing Contra for the discount, this preserves true ASP metrics and keeps GST consistent, cashbacks funded by gateways should sit in fee adjustments or other income depending on terms.
As a founder, what live metrics should I monitor on the dashboard to catch issues early
Watch gateway success rate, fees as percent of GMV by gateway, refund and chargeback rates, clearing account aging, settlement TAT, GST ITC utilization, and TDS variances, AI Accountant’s dashboard surfaces these with alerts for abnormal spikes, settlement delays, or ITC leakage.
Can we post net settlements directly to revenue for simplicity, our volumes are high and the team is lean
No, posting net settlements to revenue hides fees and distorts taxes, always book gross revenue, fees, GST, and net settlement separately using clearing accounts, it improves analytics and audit readiness, and prevents GST or TDS inaccuracies.
What is the recommended cadence for reconciliations and exception handling in a fast growing SaaS
Daily exception review for failed or pending payments, weekly partial reconciliation of gateway ledgers to settlement files, monthly full reconciliation including bank, maintain an exception queue with owners and SLAs, AI Accountant can run this as a managed service, ensuring month end close is predictable.
How do we handle TDS under section one nine four O for marketplace or aggregator models
Assess your commercial flow to confirm if one nine four O applies, set up vendor wise TDS mappings, monitor gross credits and deduct TDS at source, reconcile Form twenty six Q filings, AI Accountant can design the SOP, calculate deductions, and align challans, reducing compliance friction.
We are preparing for audit, what artifacts should we have for payment gateway integration
Maintain mapping docs, SOPs, change logs, API and webhook configurations, reconciliation reports by level, gateway invoices and settlement statements, GST and TDS filings, and exception closure logs, AI Accountant packages these in an audit binder so your CA and auditor have a complete trail.
