GST for E-commerce: A Practical Guide for Sellers, Marketplaces and D2C Brands
GST for e-commerce splits compliance between two parties: the platform that collects payment and the merchant who owns the goods. The platform withholds 0.5% of your net taxable sales as tax collected at source (TCS) and files its own return on it. You issue invoices, charge the right tax for each destination state, report every sale, and claim back the TCS and the credit on fees.
This page walks through those duties in the order they come up, from registration to monthly filing. Written by LegalDev's E-commerce Tax Advisory Cell, a team with 10+ years of collective experience in indirect taxation, marketplace compliance (Amazon, Flipkart, Meesho), TCS reconciliation and multi-state registration for online merchants.
TCS Rate
0.5% of net sales
GSTR-1 / 3B Due
11th / 20th
Handled By
E-commerce Tax Cell
Key Takeaways
Selling goods through a TCS-collecting marketplace needs a GSTIN from the first sale. The usual turnover exemption does not apply.
TCS is 0.5% (0.25% CGST + 0.25% SGST intra-state, 0.5% IGST inter-state). Pages quoting 1% are outdated.
Each state where stock is held needs a registration or an additional place of business.
Reconcile the platform's TCS report, the portal figure and your net sales every month.
GST on marketplace fees (18%) is eligible ITC for taxable suppliers, and is often the most under-claimed item in an e-commerce ledger.
Who Does What: Operator, Seller, Brand
GST law calls the platform owner an "electronic commerce operator" (ECO) and the merchant selling on it the "supplier". A D2C brand with its own storefront is a supplier too, and becomes an operator only if it hosts other people's products. Obligations attach to these labels:
| Role | Core Duties |
| Operator | Register in every state it supplies to; collect TCS; file GSTR-8 monthly; file an annual statement |
| Seller on a marketplace | Register; issue invoices; file GSTR-1 and GSTR-3B; reconcile and use TCS credit; claim ITC |
| D2C brand (own site only) | Follow ordinary thresholds; marketplace rules apply the moment it lists on one |
Registration: What Operators and Sellers Each Need
Requirements differ by role:
Operators
An ECO liable to collect TCS must register with no turnover exemption, in each state it supplies to. The GST Council's TCS FAQ covers operators with no physical presence in a state and the appointment of a representative. Composition is not available.
Marketplace Sellers (Goods)
Section 24 of the CGST Act removes the threshold exemption for suppliers selling through a TCS-collecting operator. List one product and you need a GSTIN. A narrow exemption for some small intra-state goods sellers exists but carries conditions, so check it against your sales pattern.
Own-Website Sellers
Usual limits apply: ₹40 lakh for goods and ₹20 lakh for services (₹20 lakh and ₹10 lakh in special category states). Add a marketplace listing and the marketplace rule overrides this.
What the Application Needs
PAN and Aadhaar of the proprietor or directors, business address proof, bank proof, a photograph, and incorporation papers for companies and LLPs. Pick HSN codes per product category with care, since they decide your tax rate and what appears on your invoice. See our GST Registration Online service.
TCS Collection Under GST Section 52: The Mechanics
Section 52 tells the operator to deduct tax from the amount it owes you. The base is the net value of taxable supplies made through the platform (gross sales less returns). The sequence:
1
Platform Pays You
Order value less its fees and less TCS.
2
Operator Deposits and Reports
TCS is deposited within the following month and reported in GSTR-8 by the 10th.
3
TCS Appears Against Your GSTIN
Visible on the GST portal.
4
Accept the Credit
It lands in your electronic cash ledger.
5
Use It in GSTR-3B
Set it against tax payable.
Example (made-up numbers): Net taxable sales through a marketplace in a month are ₹2,00,000, so TCS withheld is ₹1,000. If GST payable for the month is ₹9,000, you pay the remaining ₹8,000 from your own funds.
Where trouble starts: TCS is attributed to your GSTIN based on how the platform recorded each order. With registrations in two states, an order booked against the wrong one puts credit in the wrong ledger. Each month, compare the platform's TCS report, the portal figure and your own net sales. Caught in week two it is a ten-minute fix; caught after a notice, it is a project.
GST Compliance for Multi-State Warehouses
Each GSTIN is a separate taxable person. If a fulfilment centre in another state holds your goods, that state must appear on your registration as an additional place of business. The CBEC's e-commerce FAQ treats storage in a marketplace-run facility as a place of business issue. Fulfilment programmes move your stock across states for you, which is convenient and also where registrations go missing.
A Worked Example
A Rajasthan seller stores goods in fulfilment centres in Maharashtra and Tamil Nadu, so all three states need registrations. Shipping 500 units to Maharashtra at a transfer value of ₹1,00,000 is a supply between your own registrations: it needs a tax invoice and IGST at the goods' rate (₹18,000 at 18%, for illustration), and the receiving GSTIN takes credit. A Pune customer buying from that stock is an intra-state sale (CGST + SGST, charged by the Maharashtra GSTIN). Had the order been served from Tamil Nadu stock, it would be inter-state and attract IGST.
Decision Framework
This is our practical view, not a legal rule:
Few states, small volumes
Keep stock in one place; accept more IGST sales and fewer returns to file.
High volumes in 2–3 regions
Extra registrations may pay for themselves, as more sales become intra-state and compliance is predictable.
Platform-driven distribution
Audit it. You may already be in states you never registered for.
Documents that carry the weight: transfer invoices with correct values, a clean stock ledger by GSTIN, and e-way bills where they apply. Missing paperwork on inter-state movement is how a routine consignment turns into a detention.
Input Tax Credit on Marketplace Commissions and Fees
Platforms bill you for referral fees, closing fees, shipping and fulfilment, storage, advertising and returns handling, with 18% GST on each. For a seller making taxable supplies this is eligible ITC, and across a year it is a large number. Check before you claim:
Name and state. Invoice issued to the right GSTIN. A home-state invoice is no use for a second-state fee.
GSTR-2B. Credit is available once the supplier reports the invoice and it reflects in your statement.
Timing. Section 16(4): 30 November after the financial year, or the annual return date if earlier.
Blocked items. Barred credit stays barred; with exempt supplies, a proportionate reversal can apply.
Fee credit is often under-claimed because invoices arrive as a bulk download and nobody reconciles them.
GST Return Filing for Online Businesses
The calendar is the same as for any regular taxpayer, but the content differs:
| Return | Who Files | What Goes In It | Due |
| GSTR-1 | Seller | Outward supplies, including marketplace sales, split by operator | 11th of next month (monthly filers) |
| GSTR-3B | Seller | Summary, ITC, TCS credit used, cash payment | 20th of next month |
| GSTR-8 | Operator | TCS collected from sellers | 10th of next month |
| GSTR-9 | Seller | Annual return, where applicable | 31 December |
| GSTR-9B | Operator | Annual statement of TCS | 31 December of the next financial year |
Marketplace sales go in the operator-wise section of GSTR-1. Your figures there should line up with the operator's GSTR-8, which is the department's first cross-check. Issue credit notes in the same period, because TCS applies to net sales. Our GST Return Filing service handles the monthly cycle.
GSTR-3B late fee is ₹50 a day (₹20 for nil returns), subject to caps, plus 18% annual interest on tax paid late. Industry sources report that returns more than three years overdue can no longer be filed, so clear old backlogs early. B2B e-invoicing applies above ₹5 crore turnover; B2C marketplace orders are generally outside it.
Where Online Sellers Lose Money
Stocking in a state without registering there
Transferring stock without a taxable invoice
Orders booked to the wrong GSTIN, scrambling TCS credit
Never reconciling platform TCS reports
Fee credit unclaimed because invoices are not in GSTR-2B
Outdated rates or HSN codes after a category changes
Ignoring a portal notice because it looks like automated mail
How LegalDev Supports E-commerce Businesses
We handle state-wise registrations and additional places of business, monthly GSTR-1 and GSTR-3B, TCS reconciliation against platform reports and portal data, a fee-invoice credit check, and notice replies. For setup, see GST Registration. For ongoing returns, see GST Return Filing. Got a notice? Our notice reply team can start from the document.
Frequently Asked Questions
Got questions? Find clear answers from our tax advisory team:
For sellers of goods through an operator that collects TCS, generally yes, from the first sale. The usual turnover exemption does not apply. Check the narrow small-seller exemption with a professional before assuming it covers you.
Yes. Operators must register irrespective of turnover, and in each state they supply to.
A deduction made by the operator at 0.5% of net taxable sales and deposited with the government on your behalf.
The operator, by the 10th of the following month. The seller files GSTR-1 and GSTR-3B.
It is credited to your electronic cash ledger after you accept it and used against GST payable. Any unused balance can be refunded as per the rules.
Yes. Each state where you store goods needs a registration or an additional place of business.
Yes, when it crosses state lines between your own GSTINs. It needs a tax invoice and IGST.
Yes, provided the invoice is in your name, appears in GSTR-2B and falls within the time limit.
Check month cut-offs, returns and which GSTIN the orders were booked to. Raise the difference with platform support with order-level data.
Below the standard thresholds, an own-website seller may not need one. Listing on a marketplace changes that.
GSTR-1 and GSTR-3B monthly, with an annual return where it applies.