Why GST is different for online sellers
A shop in Gurugram sells to customers who walk in. A marketplace seller in Gurugram sells to customers in every state, from stock that may sit in a warehouse in Haryana, Karnataka or Maharashtra, through a platform that collects tax at source and issues credit notes for returns. Each of these creates GST work.
Most problems we see for online sellers are not tax evasion. They are reporting errors: sales reported to the wrong state, returns double counted, TCS never claimed, or a fulfilment warehouse never added to the registration. These lead to notices, blocked TCS credit, and books that never match the marketplace.
Registration rules for e-commerce sellers
| Situation | GST position |
|---|---|
| Selling goods through a marketplace, inter-state | Registration compulsory, regardless of turnover |
| Selling goods only within your own state, turnover below the threshold | May sell without a GSTIN using a portal enrolment number, subject to conditions |
| Composition taxpayer selling goods through a marketplace | Allowed within the same state only |
| Selling services through an e-commerce operator | Threshold applies; for some services the operator itself pays tax |
| Own website selling directly, with no third-party operator | Normal threshold rules apply |
The relief for unregistered sellers came through notifications effective from 1 October 2023. It applies only to goods, only within one state, and requires PAN, an address in that state, and an enrolment number from the GST portal. Most growing sellers outgrow it quickly, because a single customer outside the state is enough to need a GSTIN. Our GST registration service handles new seller registrations.
Marketplace warehouses: APOB and other states
When you use a fulfilment programme such as Amazon FBA, Flipkart Smart Fulfilment or similar, your stock is kept in the operator’s warehouse. GST law treats that warehouse as a place of business where your goods are stored.
- Warehouse in Haryana: add it as an Additional Place of Business (APOB) on your existing GSTIN through a non-core amendment, with the warehouse address and the consent or agreement provided by the marketplace.
- Warehouse in another state: take a separate GST registration in that state under the same PAN, and then add the warehouse as its principal or additional place of business.
- Stock transfer: moving stock from your Haryana registration to a registration in another state is a taxable supply between distinct persons, with a tax invoice and, where required, an e-way bill.
Keeping separate books for each state registration is important. For example, sellers registered in both Haryana and Karnataka need separate returns and separate stock records.
TCS under Section 52 and how to claim it
The marketplace collects TCS on the net value of taxable supplies made through it, that is, sales minus returns in the month. The current rate is 0.5% (0.25% CGST plus 0.25% SGST for intra-state supplies, or 0.5% IGST for inter-state supplies).
- The operator files GSTR-8 by the 10th of the following month, showing the TCS collected against your GSTIN.
- The amount appears on your portal under TDS and TCS credit received.
- You accept the amount, or reject it with reasons where the figures do not match your records.
- The accepted amount is credited to your electronic cash ledger.
- You use the balance to pay tax in GSTR-3B, or claim a refund of the excess.
Every month, we match the GSTR-8 figures with the marketplace’s TCS report and with your own sales. Differences usually point to returns reported in another month or sales missed in GSTR-1.
GSTR-1 from marketplace reports
Each marketplace gives reports in its own format. We build GSTR-1 from the invoice-level sales and returns reports, not from settlement statements.
| Item | What we report |
|---|---|
| B2C sales | State-wise, rate-wise taxable value and tax, with the correct place of supply |
| B2B sales | Invoice-wise, where the buyer gave a GSTIN |
| Returns | Netted against B2C sales of the same state and rate, or as credit notes for B2B |
| Supplies through the operator | Reported in the e-commerce table of GSTR-1 against the operator’s GSTIN |
| HSN summary | HSN-wise quantity and value, as required for your turnover |
For B2C sales, the place of supply is the customer’s delivery state. A Gurugram seller shipping to a customer in Pune must show the sale as an inter-state supply to Maharashtra with IGST. Errors here move tax to the wrong state and are a common reason for scrutiny.
Returns, cancellations and reconciliation
Customer returns, RTOs and cancellations are where marketplace books go wrong. A sale may be invoiced in March and returned in April. The marketplace may cancel an order before dispatch, or deduct a penalty for a late shipment.
Our monthly reconciliation covers:
- Sales and returns as per marketplace reports compared with GSTR-1.
- TCS as per GSTR-8 compared with the marketplace TCS report.
- Settlement amounts received in the bank compared with sales minus commission, fees, TCS and TDS.
- Commission and fee invoices raised by the marketplace, checked in GSTR-2B so that you claim ITC on them.
- Income tax TDS under Section 194-O, matched with Form 26AS.
We can also prepare monthly entries for Tally so that your books match the GST returns. See our book-keeping service if you want us to maintain the full accounts.
Common mistakes online sellers make
- Reporting all B2C sales under the home state instead of the customer’s state.
- Filing GSTR-1 from the payment report, so returns and cancellations are mismatched.
- Not accepting TCS credit on the portal, so it never reaches the cash ledger.
- Not adding fulfilment warehouses to the registration.
- Not claiming ITC on marketplace commission and shipping invoices.
- Ignoring returns that come back in a later month.
Why online sellers work with KSV
- Marketplace experience. We prepare monthly GST data for sellers on Myntra, Flipkart, Ajio, Amazon, Meesho and Limeroad, so we know where each report hides the numbers that matter.
- Repeatable process. The same checks are run every month, with a working file you can keep.
- Multi-state support. We handle sellers with registrations in more than one state.
- Clear fees. Our packages start at Rs 1,499 a month, with marketplace volumes quoted separately. See our pricing page.
We work with online sellers across Gurugram, Delhi, Haryana, Uttar Pradesh, Rajasthan and Chhattisgarh, and with sellers elsewhere in India who sell on these marketplaces. Contact us with your marketplace list and monthly order volume.
Frequently asked questions
Is GST registration compulsory for selling on Amazon or Flipkart?
For goods, generally yes, regardless of turnover. A limited exception allows small sellers below the registration threshold to sell goods within their own state through e-commerce operators using an enrolment number instead of a GSTIN. Most sellers still take registration because marketplaces, B2B buyers and inter-state sales need it.
Can I sell to other states without GST registration?
No. The exemption for unregistered sellers covers only intra-state supply of goods. If you want customers across India to buy from you, you need a GSTIN.
Can a composition dealer sell on a marketplace?
Yes, but only within the same state. Since 1 October 2023, composition taxpayers can make intra-state supplies of goods through e-commerce operators. Inter-state supply of goods is not allowed under the composition scheme.
What is TCS under GST and how much is deducted?
Under Section 52, the marketplace collects tax at source on the net value of taxable supplies made through it. The rate has been 0.5% (0.25% CGST plus 0.25% SGST, or 0.5% IGST) since July 2024. The collected amount is credited to your electronic cash ledger after the operator files GSTR-8 and you accept it on the portal.
How do I use the TCS credit?
Once accepted, the TCS amount sits in your electronic cash ledger and can be used to pay GST liability in GSTR-3B, or claimed as a refund of excess balance. Unclaimed TCS is a common source of lost money for sellers.
Why do I need to register a marketplace warehouse?
If your stock is kept in a marketplace fulfilment centre, that warehouse is a place where your goods are stored, and it must be added to your registration as an additional place of business. If the warehouse is in another state, a separate registration in that state is needed.
Should GSTR-1 be filed from the sales report or the payment report?
From the sales and returns reports, which show invoice-level taxable value, tax and the customer's state. Payment and settlement reports are used to reconcile commission, shipping fees, TCS and TDS, not to report sales.
Myntra aur Flipkart ki returns GSTR-1 mein kaise dikhate hain?
Customer returns reduce your B2C taxable value for the month in which the return is processed, by state and rate, and the credit notes issued by the marketplace on your behalf are taken into account. We net them off state-wise from the marketplace returns report.
Do I pay income tax on marketplace TDS?
Marketplaces also deduct income tax TDS under Section 194-O. That TDS appears in your Form 26AS and is claimed in your income tax return. It is separate from GST TCS, and both must be reconciled.