Complete GST Guide for E-commerce Sellers in India (2025-26)
Everything an Indian online seller needs to know about GST — registration, returns, ITC, TCS, invoicing, audits, and penalties. Practical guide for Amazon, Flipkart, and D2C sellers.
GST is not optional for online sellers in India — it is mandatory from your very first sale on any marketplace. This guide covers every aspect of GST that affects e-commerce sellers in FY 2025-26: from registration and return filing to Input Tax Credit, TCS, invoicing rules, and how to avoid penalties.
Whether you sell on Amazon, Flipkart, Meesho, or run your own D2C website, this is your single reference for everything GST.
Why GST Registration Is Non-Negotiable for Online Sellers
The GST Act carves out a special rule for e-commerce sellers. Under Section 24(ix) of the CGST Act, any supplier who sells through an e-commerce operator (Amazon, Flipkart, Meesho, Snapdeal, Myntra, etc.) must register for GST — regardless of annual turnover.
This means the standard threshold exemptions (₹20 lakh for services / ₹40 lakh for goods) do not apply to you if you sell on a marketplace.
When must you register?
- Before your first sale through a marketplace (no threshold exemption)
- If you sell only on your own website (D2C): threshold applies — register once turnover crosses ₹20 lakh (₹10 lakh in special category states)
- If you export goods or services: mandatory registration regardless of turnover
What documents do you need?
| Document | Purpose |
|---|---|
| PAN card | Mandatory — GSTIN is PAN-based |
| Aadhaar card | Identity verification |
| Proof of business address | Rent agreement / utility bill |
| Bank account statement | For disbursements |
| Photograph | Proprietor / authorised signatory |
Once registered, you receive a 15-digit GSTIN (GST Identification Number) that must appear on every invoice you issue.
Read our detailed guides: GST Registration: The Beginner's Guide and Basic GST Registration Guide for E-commerce Sellers. You can also use our GST Registration service to get it done by a CA.
GST Composition Scheme: Can Online Sellers Use It?
The Composition Scheme allows small businesses to pay GST at a flat rate (1–6% on turnover) instead of the standard slab rates, with minimal compliance. However, marketplace sellers cannot use it.
Section 10(2)(d) of the CGST Act explicitly bars taxpayers who supply goods through an e-commerce operator from opting into the Composition Scheme.
Who can use it?
- Sellers with their own D2C website (not selling through Amazon/Flipkart/Meesho)
- Turnover under ₹1.5 crore (₹75 lakh in special category states)
- No interstate supplies
Who cannot:
- Anyone selling on Amazon, Flipkart, Meesho, Snapdeal, or any other marketplace
- Service providers (except restaurant services)
- Manufacturers of notified goods (pan masala, tobacco, ice cream)
Read: GST Composition Scheme Explained and Should You Use the GST Composition Scheme?
GST Returns Every E-commerce Seller Must File
This is the area where most sellers face confusion and penalties. Here is a clear breakdown.
GSTR-1: Outward Supplies Statement
GSTR-1 reports all your sales (outward supplies) for the period. This data flows to your buyers' GSTR-2B, so accuracy here directly affects your buyers' ITC claims.
Frequency:
- Monthly: if previous year turnover > ₹5 crore
- Quarterly (QRMP scheme): if previous year turnover ≤ ₹5 crore
Key details to include: Invoice-level B2B sales, consolidated B2C sales, credit/debit notes, export data.
Read: GSTR-1: A Quick Introduction
GSTR-3B: Monthly Summary Return
GSTR-3B is a self-declared summary of your outward and inward supplies and the GST payable. It must be filed every month (even under QRMP, where you file GSTR-1 quarterly but GSTR-3B monthly).
What it covers:
- Total outward taxable supplies
- ITC available and claimed
- Net tax payable (after adjusting ITC and TCS credit)
- Tax payment
Read: GST Guide: GSTR-3B Explained
QRMP Scheme: File Quarterly, Pay Monthly
Under QRMP (Quarterly Return Monthly Payment), taxpayers with ≤ ₹5 crore turnover can file GSTR-1 and GSTR-3B quarterly while paying tax monthly via a Fixed Sum Method (FSM) challan in the first two months of each quarter.
This reduces compliance burden from 24 returns/year (12 GSTR-1 + 12 GSTR-3B) to just 8 per year.
Check all due dates: GST Due Dates Calendar for FY 2025-26
GSTR-9: Annual Return
GSTR-9 is the annual reconciliation return filed by 31 December after the financial year ends. It consolidates all the monthly/quarterly data you filed during the year.
Who must file? All regular taxpayers with turnover above ₹2 crore. Below ₹2 crore, it is optional (but advisable).
GSTR-9C is the reconciliation statement (previously required a CA certificate; now self-certified for turnover ≤ ₹5 crore).
Read: GSTR-9 and GSTR-9C: Complete Guide
TCS Under GST: How Marketplace Deductions Work
Tax Collected at Source (TCS) is a key mechanism for marketplace sellers to understand. Under Section 52 of the CGST Act, every e-commerce operator must:
- Collect 1% of the net taxable value of all supplies made through their platform (0.5% CGST + 0.5% SGST, or 1% IGST for interstate)
- Deposit this amount with the government by the 10th of the following month
- File GSTR-8 reporting these collections
What this means for you as a seller:
- Amazon / Flipkart deducts 1% TCS from every payment they make to you
- This amount appears in your Electronic Credit Ledger and can be used to offset your GST liability
- You will see it reflected in your GSTR-2B each month
- Claim this TCS credit in GSTR-3B (Table 8: TDS/TCS credit received)
Example: If you sell ₹1,00,000 worth of goods in a month through a marketplace, ₹1,000 TCS is deducted. This ₹1,000 reduces your net GST payment for the month.
Input Tax Credit (ITC) for E-commerce Sellers
Input Tax Credit is the mechanism by which GST paid on your business inputs reduces the GST you owe on your sales. Used correctly, ITC prevents the cascading effect of tax-on-tax.
What You Can Claim ITC On
| Eligible | Not Eligible |
|---|---|
| Stock / raw materials | Personal expenses |
| Packaging materials | Food, beverages |
| Freight / logistics services | Motor vehicles (cars) |
| Advertising and marketing | Membership fees (clubs) |
| Professional fees (CA, legal) | Travel for non-business purpose |
| Office supplies and equipment | Construction of immovable property |
| Cloud software / SaaS tools | Gifts exceeding ₹50,000 per person |
How to Claim ITC Correctly
- Match with GSTR-2B — Only claim ITC that appears in your auto-generated GSTR-2B (populated from your suppliers' GSTR-1 filings). Unmatched ITC can be disallowed.
- Receive goods/services — ITC is available only after you have actually received the supply.
- Supplier has filed and paid — If your supplier has not filed their GSTR-1 or paid their tax, your ITC claim is at risk.
- Claim within time limits — ITC must be claimed before the earlier of: filing the September return of the following year, or the annual return filing date.
Read: GST Input Tax Credit: Everything Sellers Need to Know
GST Invoicing Requirements for Online Sellers
Every taxable sale must be backed by a GST-compliant tax invoice. Missing or incorrect invoices can lead to ITC denial for your buyers and penalties for you.
Mandatory Fields on a GST Invoice
- Your name, address, and GSTIN
- Invoice number (sequential, unique per financial year)
- Invoice date
- Buyer's name, address, and GSTIN (for B2B sales)
- HSN/SAC code for goods/services
- Description, quantity, and unit price
- Taxable value (before GST)
- GST rate and amount (CGST + SGST for intrastate; IGST for interstate)
- Total invoice value (including GST)
- Place of supply
Time Limits for Issuing Invoices
- B2B sales: Invoice must be issued on or before the date of supply (or within 30 days for services)
- B2C sales: Invoice must be issued at the time of supply
- Continuous services: Invoice by the due date of payment or within 30 days of completion
E-invoicing
Businesses with turnover above ₹5 crore are required to generate e-invoices (electronic invoices validated by the GST portal's Invoice Registration Portal). If you cross this threshold, your invoicing software must support e-invoice generation.
Look up the HSN/SAC code for your products at our GST Registration service page.
GST Audit: What E-commerce Sellers Need to Know
A GST audit examines whether your returns, books of accounts, and tax payments are accurate and complete. There are two types:
Departmental Audit (Section 65)
Initiated by GST authorities. Your books must be made available within 15 working days of notice. Officers can examine your records and issue a demand if discrepancies are found.
Annual Self-Assessment Reconciliation (GSTR-9C)
For taxpayers with turnover above ₹5 crore, GSTR-9C requires a reconciliation between your audited financials and your filed GST returns. Below ₹5 crore, it is self-certified.
How to stay audit-ready:
- Maintain invoice-level records for at least 6 years
- Reconcile your GSTR-2B ITC with your books every month
- Ensure GSTR-1 and GSTR-3B figures are consistent
- Keep bank statements, purchase bills, and expense records organised
Read: GST Audit Explained Simply and How to Prepare for a GST Audit
Common Mistakes and Penalties
Mistakes That Cost Sellers Money
- Late filing — GSTR-1 and GSTR-3B have separate late fees. Each day of delay costs ₹50 (₹20 for nil returns) up to a maximum of ₹10,000 per return.
- Claiming ITC without GSTR-2B match — Authorities can disallow unmatched ITC and levy interest at 18% per annum.
- Wrong place of supply — Using CGST+SGST instead of IGST (or vice versa) on interstate transactions leads to demand notices.
- Not reporting marketplace TCS — Failing to claim TCS credit in GSTR-3B means you overpay tax each month.
- Missing e-invoice requirement — If your turnover crosses the e-invoicing threshold and you continue issuing manual invoices, those invoices are invalid and ITC is blocked for your buyers.
Penalty Structure
| Offence | Penalty |
|---|---|
| Late filing of return | ₹50/day (₹20 for nil return), max ₹10,000 |
| Tax evasion | 100% of tax evaded (minimum ₹10,000) |
| Incorrect ITC claim | Tax + 18% interest + 10–100% penalty |
| Non-registration despite being required | 10% of tax due, minimum ₹10,000 |
| Incorrect invoice | Up to ₹25,000 per offence |
Read: Common Mistakes in GST Return Filing and How to Avoid GST Underpayment Problems
Free GST Tools for Sellers
Use our free tools to stay on top of your GST compliance:
- GST Due Dates Calendar — GSTR-1, GSTR-3B, GSTR-9 due dates with QRMP scheme table and late fee schedule
- TDS Rate Chart — Section-wise TDS and TCS rates for FY 2025-26
- Income Tax Slabs — New vs old regime comparison for business owners
- GST Registration Service — Get your GSTIN with help from a CA
- GST Return Filing Service — Monthly GSTR-1 and GSTR-3B filed by professionals
Need help filing GST returns or staying compliant? Our GST Return Filing service handles everything end-to-end.
Quick Navigation
- GST Registration Requirements
- Composition Scheme Eligibility
- Return Filing Guide
- TCS: How Marketplace TCS Works
- Input Tax Credit
- Invoicing Rules
- Audit Preparation
- Penalties to Avoid
Key GST Due Dates (FY 2025-26)
| Return | Frequency | Due Date |
|---|---|---|
| GSTR-1 | Monthly | 11th of next month |
| GSTR-1 | Quarterly (QRMP) | 13th of month after quarter |
| GSTR-3B | Monthly | 20th / 22nd / 24th* |
| GSTR-9 | Annual | 31 December |
*Due date varies by state. See the full due dates calendar.
Need Help?
Filing GST returns yourself is possible, but many sellers prefer to outsource to avoid errors.
Use Our GST Return Filing Service →
Professional filing, timely reminders, and ITC reconciliation — all handled.
Related Guides
- GSTR-1: Quick Introduction
- GSTR-3B Explained
- GSTR-9 and GSTR-9C Guide
- GST Input Tax Credit Explained
- GST Composition Scheme
- Benefits of GST Outsourcing
- The Importance of Accurate GST Filing
Free Tools
Frequently Asked Questions
Is GST registration mandatory for e-commerce sellers?+
Yes. Every e-commerce seller — regardless of turnover — must register for GST if they sell through a marketplace like Amazon, Flipkart, or Meesho. The normal threshold exemptions (₹20 lakh / ₹40 lakh) do not apply to marketplace sellers under Section 24(ix) of the CGST Act.
What GST returns does an e-commerce seller need to file?+
Most regular sellers file GSTR-1 (outward supplies — monthly or quarterly under QRMP) and GSTR-3B (monthly summary return). Annual sellers also file GSTR-9. Under the QRMP scheme, taxpayers with up to ₹5 crore turnover can file GSTR-1 quarterly and pay tax monthly via a Fixed Sum Method challan.
Can an e-commerce seller opt for the GST Composition Scheme?+
No. Sellers who supply goods through an e-commerce operator (like Amazon or Flipkart) are specifically excluded from the Composition Scheme under Section 10(2)(d) of the CGST Act. However, sellers with their own direct-to-consumer (D2C) website may be eligible if they meet turnover and other criteria.
What is TCS under GST and how does it affect marketplace sellers?+
Tax Collected at Source (TCS) under GST requires e-commerce operators to collect 1% of the net taxable value of sales made through their platform (0.5% CGST + 0.5% SGST) and deposit it with the government. This amount reflects in your GST credit ledger and can be claimed as a credit against your output tax liability when filing GSTR-3B.
What Input Tax Credit can an e-commerce seller claim?+
You can claim ITC on GST paid for business inputs: stock purchases, packaging materials, courier / logistics services, professional fees, advertising, and other business expenses. ITC cannot be claimed on personal expenses, food, travel for personal use, or items used for non-business purposes. Always match your ITC with GSTR-2B before claiming.