Selling products online through Amazon has opened big opportunities for small businesses and startups across India. At the same time GST compliance for Amazon sellers often feels confusing and stressful. Many sellers receive GST notices not because they did something illegal but because they did not fully understand how GST works for online marketplaces.
This complete guide explains everything in simple language so you can manage GST correctly while selling on Amazon without fear or confusion.
Is GST Registration Mandatory for Amazon Sellers
Yes GST registration is compulsory if you want to sell products on Amazon. Even if your annual turnover is below forty lakh rupees GST exemption does not apply. Under GST law anyone selling through an ecommerce platform must take regular GST registration.
You cannot sell on Amazon under the composition scheme. Amazon allows only regular GST registered sellers. This is one of the most important points every new seller must understand before onboarding.
Documents Required for GST Registration
To get GST registration you generally need PAN card Aadhaar card address proof of business bank account details and details of your business structure such as proprietorship partnership LLP or company. Once GST is approved your GSTIN must be updated correctly in Amazon Seller Central.
Any mismatch in name address or GST number can create issues in payments and compliance later.
Understanding How Amazon TCS Works
One unique aspect of selling on Amazon is TCS which means Tax Collected at Source. Amazon deducts one percent GST on the net value of your taxable sales and deposits it directly with the government.
This deducted amount is not an extra tax burden. It appears in your GST portal as credit. You can adjust this amount while paying GST in your monthly return. Many sellers forget to claim this credit which leads to higher tax outflow than required.
TCS details are reported by Amazon and must be matched with your own GST records every month.
Who Issues the GST Invoice Seller or Amazon
This is a very common confusion. The seller issues the GST invoice to the customer not Amazon. Amazon only provides the platform and logistics support.
This means you are responsible for charging the correct GST rate mentioning the correct place of supply and reporting the sale correctly in your GST returns. Any error in invoicing becomes the seller’s responsibility.
GST Returns Required for Amazon Sellers
Amazon sellers usually need to file GSTR 1 and GSTR 3B regularly.
GSTR 1 includes detailed sales data invoice wise and state wise. GSTR 3B is a summary return where you pay GST after adjusting input tax credit and TCS.
Amazon files GSTR 8 for TCS and you should always reconcile your data with this return to avoid mismatch.
Even if there are no sales in a month you still need to file nil returns to stay compliant.
Reporting Amazon Sales Correctly in GST
Sales made through Amazon should be reported as normal outward supplies. The place of supply depends on customer location. For same state sales CGST and SGST apply and for interstate sales IGST applies.
One common mistake sellers make is reporting Amazon sales as B2B or under wrong state codes. Accurate reporting is critical because GST is a data driven system and mismatches are easily detected.
GST Treatment of Returns Refunds and Cancellations
Returns are common in ecommerce business. From GST perspective returns must be handled carefully.
If a product is returned after invoice generation you need to issue a credit note and adjust the tax liability in your GST return. If returns are ignored GST gets paid on income you never actually earned.
Refund related adjustments must always match Amazon sales and return reports.
Input Tax Credit for Amazon Sellers
Input tax credit helps reduce your GST burden. Amazon sellers can claim ITC on purchase of goods packaging material shipping expenses advertising costs warehousing charges and Amazon service fees.
To claim ITC the supplier must have filed their GST return and the invoice must appear in your GSTR 2B. Regular reconciliation ensures that eligible credit is not lost.
Common GST Mistakes Made by Amazon Sellers
Many sellers face problems due to small mistakes such as not reconciling Amazon sales with GST returns ignoring TCS credit incorrect place of supply late filing of returns or claiming ineligible ITC.
These mistakes often result in GST notices interest penalties or blocked credit. Most of them are avoidable with proper monthly review.
Importance of Monthly Reconciliation
GST compliance for Amazon sellers requires regular reconciliation. Every month you should match Amazon sales reports with GSTR 1 match TCS with GST credit ledger and verify Amazon fees with purchase invoices.
This simple habit prevents major issues and keeps your GST records clean.
Final Thoughts
GST compliance for Amazon sellers may look complex at first but once you understand the flow it becomes manageable. The key is timely registration correct invoicing regular reconciliation and disciplined return filing.
When GST is handled properly selling on Amazon becomes smooth transparent and scalable. Good compliance not only avoids penalties but also builds long term trust with the tax system and supports sustainable business growth.