Cashfree Reconciliation Software for India — Payments, Payouts, MDR, GST, TDS Matching
Cashfree runs two products that the finance team sees as one bank movement — Cashfree Payments on the inbound acquiring side, Cashfree Payouts on the outbound disbursement side, both deducting their own fees, GST, and (for marketplaces) Section 393(1)(j) TDS at 1% under payment code 1010. TransactIG ingests both dashboards, unifies them onto one matching schema, and produces a journal-ready, audit-ready reconciled close — Payments to AR, Payouts to AP, wallet movement between the two tracked as an internal transfer.
What Cashfree Settles Natively, and Where the Reconciliation Gap Appears
What Cashfree handles natively
Cashfree Payments acquires UPI, cards, netbanking, wallets, EMI, and BNPL, settling on T+1 by default with instant settlement available. Cashfree Payouts disburses to vendors, payroll beneficiaries, and refund recipients via IMPS, NEFT, RTGS, and UPI from a wallet balance funded either from Payments settlements or from direct top-ups. Both dashboards publish settlement and statement files that itemise every fee, GST, and (where applicable) TDS.
For merchants running one of the two products in isolation, the dashboard view is enough for day-to-day cash management.
Where the reconciliation gap appears
For merchants running both, the wallet sits between Payments and Payouts as an internal balance that the bank statement never sees directly. Settlement timing, refund timing across payout boundaries, MDR mix across instruments, 18% GST on MDR (ITC-eligible only when in GSTR-2B), and — for marketplaces — Section 393(1)(j) TDS at 1% on gross sales under payment code 1010 of the Income Tax Act 2025 all need a single matching layer.
Without it, finance teams either treat Payments and Payouts as two parallel books or net the wallet to revenue and lose the audit trail.
TransactIG Capabilities on Cashfree
Six matching surfaces unified across Cashfree Payments and Cashfree Payouts, with wallet-balance tracking between the two.
Settlement file ingestion
SFTP delivery or scheduled dashboard download from Cashfree Payments and Cashfree Payouts. Wallet movement between the two tracked as an internal transfer, not external cash.
MDR + 18% GST classification
MDR per instrument separated from the 18% GST. ITC-eligible GST aged against Cashfree's monthly tax invoice in GSTR-2B under Rule 36(4). Payouts fees handled on the same logic.
Section 393(1)(j) TDS — code 1010
For marketplace structures: 1% on gross sales under Section 393(1)(j) of the Income Tax Act 2025 (payment code 1010, replacing legacy 194O). Reconciled to Form 26AS at code level.
Section 52 CGST TCS — 1%
Section 52 of the CGST Act 1% TCS applied by marketplace operators, reconciled against the operator's GSTR-8 filing — carried separately from income-tax TDS.
Refund / chargeback timing
T+5 to T+7 refund reversal aged from original payment to bank debit. Chargebacks tracked through raised, evidence-submitted, won, lost states.
Variance taxonomy
FEE_DEDUCTION, TAX_DEDUCTION, REFUND_REVERSAL, ROUNDING, PARTIAL_PAYMENT, PAYOUT_FAILED, BENEFICIARY_INVALID — structured codes with maker-checker exception queue.
Cashfree Integration — Settlement File Architecture
Each row is a discrete feed configured during implementation. Cashfree publishes via its documented dashboards and SFTP delivery; TransactIG owns the unified matching schema across Payments and Payouts.
| Source | Ingest method | Cadence | Field mapping | Variance codes |
|---|---|---|---|---|
| Cashfree Payments settlement | SFTP delivery or scheduled dashboard download | Daily, T+1 default (instant available) | Settlement ID → payout batch in TransactIG | PAYOUT_MISSING_IN_BANK, AMOUNT_MISMATCH |
| Payments transaction sidecar | CSV/XLSX line items per settlement | Per settlement | Order ID → ERP invoice / SD billing doc | ORDER_MISSING, PARTIAL_PAYMENT, DUPLICATE_PAYMENT |
| Cashfree Payouts (vendor / bulk) | Payouts dashboard export or SFTP | Per batch or daily | Beneficiary ID → vendor master in ERP | PAYOUT_FAILED, BENEFICIARY_INVALID, IMPS_REVERSED |
| Refunds | Refund rows in sidecar; refund webhook events | Per refund event | Refund ID → original payment ID | REFUND_REVERSAL, REFUND_TIMING, REFUND_UNAPPLIED |
| Chargebacks / disputes | Chargeback rows in sidecar; dispute lifecycle | Per dispute event | Dispute ID → original payment ID + evidence pack | CHARGEBACK_OPEN, EVIDENCE_PENDING, CHARGEBACK_LOST |
| MDR + 18% GST | Fee + GST columns in sidecar; monthly tax invoice from Cashfree | Per transaction, monthly tax invoice | Fee GL + GST input GL | FEE_RATE_MISMATCH, GST_ON_FEE_UNCLAIMED, ITC_INELIGIBLE_2B |
| TDS withheld (marketplace) | TDS column in sidecar; quarterly 26AS download | Per transaction, quarterly 26AS | WT line → payment code 1010 (393(1)(j)) | TDS_NOT_IN_26AS, RATE_MISMATCH, SECTION_RECLASSIFIED |
| Bank credit / debit | MT940 / CAMT.053 / bank portal | Daily | Bank narration UTR → settlement ID | NARRATION_UNPARSED, CREDIT_TIMING, NET_AMOUNT_DIFF |
Common Cashfree Reconciliation Gaps
Wallet balance between Payments and Payouts
Cashfree maintains a wallet that funds Payouts from Payments settlements. The bank statement never sees this internal balance — but the GL must.
Payout failure and IMPS reversal
A payout to an invalid beneficiary or a closed account reverses back to the Cashfree wallet — but the AP entry is already posted in the ERP and needs the re-credit matched.
18% GST on MDR unclaimed in ITC
The 18% GST on Cashfree fees is ITC-eligible input tax — booked to expense by default, so the credit is lost unless explicitly classified.
Refund timing across payout boundaries
Refund initiated today reverses from a payout T+5 to T+7. The original credit and the eventual debit appear in different settlement reports.
Multi-instrument mix
UPI plus card plus netbanking on the same order — each instrument carries different MDR. Manual GL postings assume an average; per-transaction reality differs.
Bulk payout batches with partial failure
A 5,000-beneficiary salary batch with 12 failures debits the wallet at gross then credits back the 12 failed amounts on a different timestamp — the AP module needs both legs reconciled.
How TransactIG Reconciles Cashfree
Ingest settlement files
Cashfree Payments and Cashfree Payouts files land on SFTP. Bank statements, GSTR-2B, and Form 26AS feeds land alongside.
Decompose deduction layers
Gross-to-net waterfall rebuilt per payment ID and per payout. Wallet movement between Payments and Payouts tracked as an internal transfer.
Classify variances + evidence
Unmatched items route to the exception queue with variance codes, ageing, and audit-ready evidence. Maker-checker before GL posting.
Frequently Asked Questions
How does TransactIG ingest the Cashfree settlement file? +
Cashfree publishes settlements through the Cashfree Dashboard with a downloadable settlement report and a transaction-level breakdown. Larger merchants can configure SFTP delivery of the same files on a scheduled cadence. TransactIG ingests via either path — scheduled SFTP drop or scheduled dashboard download — joins the settlement summary to the transaction sidecar on the settlement ID, and rebuilds the gross-to-net waterfall. Cashfree Payments (acquiring) and Cashfree Payouts (vendor disbursement and bulk payouts) are operated as separate products with separate dashboards; TransactIG unifies both onto a single matching schema. No invented API endpoints — TransactIG relies on Cashfree's publicly documented dashboard and SFTP delivery mechanisms.
How are Cashfree Payments and Cashfree Payouts handled together? +
Cashfree Payments is the merchant acquiring side — UPI, cards, netbanking, wallets, EMI, BNPL. Cashfree Payouts is the disbursement side — vendor payments, salary, refunds at scale, and bulk transfers using IMPS, NEFT, RTGS, UPI. The two products carry different fee structures and different settlement and statement formats. TransactIG ingests both, reconciles inbound Payments settlements to AR (customer invoices, marketplace orders) and outbound Payouts to AP (vendor invoices, payroll, refund liabilities), and rolls the two views up to the same bank account that funds and receives both. Wallet balance movements between Payments and Payouts are tracked as internal transfers, not external.
How does TransactIG handle MDR and 18% GST on Cashfree fees? +
MDR varies by instrument — UPI typically zero-rated for P2M, debit and credit cards in their own bands, netbanking, EMI, international cards higher. Cashfree deducts MDR per transaction plus 18% GST on the MDR. TransactIG separates the MDR from the GST in the journal entry, classifies the GST-on-fee component as ITC-eligible input tax, and ages the provisional ITC until Cashfree's monthly tax invoice appears in GSTR-2B. Cashfree Payouts also carries its own per-transaction fee with GST — handled on the same classification logic but routed to a different GL line.
Where does Section 393(1)(j) TDS apply on Cashfree flows? +
Section 393(1)(j) of the Income Tax Act 2025 (payment code 1010, replacing legacy Section 194O) applies at 1% on gross sales where the merchant operates as an e-commerce operator facilitating sales for participant sellers. Pure payment acquiring through Cashfree Payments — where Cashfree only acquires the payment without being the listing or fulfilling platform — does not attract 393(1)(j) on the merchant. Marketplace structures running on top of Cashfree do. TransactIG distinguishes the two at onboarding and applies the correct treatment. Commission flows attract Section 393(1)(f) at 5% (payment code 1007, replacing legacy 194H).
How are refunds and chargebacks reconciled? +
Cashfree refunds reverse from a future payout on a T+5 to T+7 cycle in most cases. TransactIG matches the refund to the original payment by payment ID, ages the refund liability until the bank debit appears in a later settlement, and tags REFUND_REVERSAL with the expected settlement date. Chargebacks move through dispute lifecycle states — raised, evidence submitted, won, lost — tracked separately so the finance team sees the cash impact at each stage and the auditor sees the trail at year-end.
How long does Cashfree reconciliation implementation take? +
2 to 4 weeks. Week one configures the SFTP delivery or scheduled dashboard export, maps Cashfree's merchant ID hierarchy to the chart of accounts, and aligns the MDR rate card to fee classification rules — separately for Cashfree Payments and Cashfree Payouts. Week two configures TDS treatment, refund timing tolerance, and ITC ageing thresholds. Weeks three and four cover bank statement matching to the net payout, journal-entry generation, wallet-balance tracking between Payments and Payouts, and the maker-checker workflow.
One reconciliation layer for Cashfree Payments and Cashfree Payouts
Unified matching across acquiring and disbursement, with wallet-balance tracking between the two. 2 to 4 weeks, ISO 27001:2022, AWS Mumbai.