GST for Online Sellers: Registration, TCS and Multi-State Compliance
If you sell goods through a marketplace, you generally have to register for GST before your first
order ships. There is no ₹40 lakh cushion for marketplace sellers. From there, GST for online
sellers comes down to four recurring jobs: charging the right tax by state, reconciling the TCS
the platform withholds, keeping registrations in line with where your stock sits, and claiming
credit on the fees you pay.
We are LegalDev's E-commerce Tax Advisory Cell, with 10+ years of collective experience in
indirect taxation, marketplace compliance (Amazon, Flipkart, Meesho), TCS reconciliation and
multi-state GST registration for online merchants.
Marketplace Sellers
GSTIN from the First Sale
TCS Withheld by Platform
0.5% of Net Taxable Sales
Registration Needed
Every State Where Stock Sits
Key takeaways
If you sell goods through Amazon, Flipkart, Meesho or any other marketplace that collects tax at source, you generally need a GSTIN from your first sale, whatever your turnover.
The platform withholds 0.5% of your net taxable sales as TCS and deposits it with the government. You recover it as a credit, but only if your own records reconcile with what the platform reported.
Every state where you hold stock needs its own registration, and moving stock between your own registrations is a taxable supply.
The GST on marketplace commissions and fees is usable as input tax credit, but only if the invoice carries your correct GSTIN and shows up in GSTR-2B.
Do you need GST registration to sell online?
Marketplace sellers: yes, from day one
Section 24 of the CGST Act removes the turnover exemption for anyone supplying goods through an
e-commerce operator (ECO) that has to collect tax at source. The CBEC's own e-commerce FAQ states
this plainly. Selling ₹50,000 a month on Flipkart does not exempt you.
A narrow carve-out for small intra-state goods sellers on marketplaces has been notified, with
conditions attached. Do not rely on it unless a professional has checked it against your sales
pattern, states and platforms. Several marketplaces also ask for a GSTIN at onboarding regardless.
Your own website: the usual thresholds, with caveats
A D2C brand selling only through its own store is treated like any other supplier. The standard
limits are ₹40 lakh for goods and ₹20 lakh for services (₹20 lakh and ₹10 lakh in special category
states). Once you also list on a marketplace, the marketplace rule applies to you, and you will
need a GSTIN even if your website revenue is small. Services, including digital services, carry
their own inter-state rules, so check them separately.
Composition scheme: closed to you
The composition scheme is not available to sellers supplying through an e-commerce operator or
making inter-state supplies. Online sellers are regular taxpayers.
GST registration for e-commerce sellers: how it works
Registration is a PAN-linked application on the GST portal. Keep these ready:
PAN and Aadhaar of the proprietor, partners or directors.
Proof of the business address (rent agreement plus a utility bill, or ownership papers).
Photograph of the applicant.
Incorporation documents, for companies and LLPs.
Two choices at this stage affect everything later. The first is the HSN code for each product
category, because it fixes your rate and your invoice format. The second is the principal place of
business versus additional places. If your goods will sit in a marketplace fulfilment centre in
another state, you will need an additional place of business there. We cover that in the
multi-state section below.
TCS collection under GST for Amazon and Flipkart sellers
How TCS works
Section 52 of the CGST Act makes the marketplace collect tax at source when it pays you. The
collection is on the net value of your taxable supplies, meaning sales less returns. The current
rate is 0.5% (0.25% CGST plus 0.25% SGST for intra-state sales, 0.5% IGST for inter-state sales).
Older blogs still quote 1%; that figure is out of date.
The platform deposits the collected amount and reports it in GSTR-8, due by the 10th of the
following month. That report is what feeds your TCS credit, which is why your records and the
platform's have to match.
TCS is not extra tax
TCS is a pre-payment of your own liability. It shows up as credit in the TCS/TDS section of your
portal and, once accepted, sits in your electronic cash ledger, where it offsets tax you owe in
GSTR-3B. A seller with high returns or thin margins can end up with more TCS credit than
liability, which means cash parked with the government until it is used or refunded.
Where sellers go wrong on TCS
Not reconciling. Platforms issue monthly TCS reports. Compare them against the figure on the portal and against your own net sales. A gap is usually a return processed in a different month or a different GSTIN.
Wrong GSTIN against the order. If you hold registrations in several states, sales booked against the wrong GSTIN send TCS credit to the wrong ledger.
Never claiming it. Credit that is not accepted and used does nothing for you. Check the figure every month.
GST compliance for multi-state warehouses
The rule: a registration for every state where stock sits
Each GSTIN is treated as a distinct person. If a fulfilment centre in Haryana, Maharashtra or
Karnataka holds your inventory, you need an additional place of business registered in that state.
Many sellers miss this because the platform handles the warehouse. The CBEC FAQ specifically
addresses sellers whose goods sit in a facility operated by the marketplace, and the answer points
to registration in the state where the goods are stored.
Stock transfers are taxable supplies
When you move inventory from your home-state GSTIN to a fulfilment centre registered under another
of your GSTINs, the law treats it as a supply between distinct persons. That means a tax invoice,
IGST on the transfer value, and a matching credit in the receiving state. It is not an inventory
shuffle on paper. Marketplaces' own tools sometimes generate this documentation, but
responsibility for correct values and rates stays with you.
Place of supply for the customer sale
For an online order, the place of supply is where the goods are delivered. A customer in Bengaluru
buying from stock held in a Bengaluru warehouse by your Karnataka GSTIN is an intra-state sale
(CGST plus SGST). The same customer buying from stock held in Haryana is inter-state (IGST). This
is why a stock-placement decision is also a tax decision: the more states you stock in, the more
sales become intra-state, but the more registrations and returns you carry.
| Decision |
Tax effect |
Compliance effect |
| Stock in one state only |
Most sales are IGST |
One GSTIN, simpler returns |
| Stock in several states |
More sales are CGST plus SGST |
Multiple GSTINs, transfer invoices, separate returns for each |
Input tax credit on marketplace commissions
Marketplaces charge GST on their services to you: referral or commission fees, closing fees,
shipping and fulfilment charges, storage, and advertising. GST on these fees is an eligible input
for a seller making taxable supplies, and it usually becomes a meaningful credit.
Three conditions decide whether you can claim it:
Invoice in your name and GSTIN. The fee invoice must carry the right GSTIN, in the right state. Where you hold registrations in more than one state, check which GSTIN each invoice is raised on.
Visibility in GSTR-2B. Credit generally depends on the supplier having reported the invoice. Match your fee invoices to GSTR-2B.
Time limit. Credit for a financial year must be claimed by 30 November after it ends, or by the date you file the annual return, whichever comes first.
Credit blocked by law, such as certain personal or restricted-use items, stays blocked no matter
how it was billed. If you also have exempt supplies, a proportion of your credit may need reversal.
GST return filing for online businesses
The calendar is standard, but the content of the returns is where e-commerce differs.
| Return |
What it covers |
Due date |
| GSTR-1 |
Outward supplies, including sales through marketplaces |
11th of next month (monthly filers) |
| GSTR-3B |
Summary, tax payable, ITC and payment |
20th of next month |
| GSTR-9 |
Annual return |
31 December, where applicable |
In GSTR-1, supplies made through an e-commerce operator are reported in a section reserved for
them, split by operator. Getting this wrong creates a mismatch with the platform's own GSTR-8
filing. Credit notes for returns need the same care, because TCS is collected on net sales.
Late filing has teeth. The late fee on GSTR-3B is ₹50 a day (₹20 for nil returns), subject to
caps, and interest on unpaid tax is 18% a year. Industry sources also report that returns more
than three years overdue can no longer be filed on the portal, so old gaps are best cleared early.
Your state or platform may add its own seller-side deadlines, so check them.
Where e-commerce sellers lose money
Registering in one state while stocking in four.
Not recording stock transfers as taxable supplies.
Claiming ITC on fee invoices that are not in GSTR-2B.
Skipping TCS reconciliation for six months, then discovering a gap.
Entering the wrong HSN or tax rate after a rate change on a product category.
Treating a portal notice as a courtesy reminder.
How LegalDev handles this for online sellers
We work with marketplace and D2C sellers across the sequence above. That means registration and
additional-place-of-business setup across states, monthly return preparation, TCS reconciliation
against platform reports and the portal, credit review on marketplace fees, and replies when a
notice arrives. You get one team that knows the platform reports, not a general bookkeeping desk.
For setup, see our GST registration service. For monthly work, see GST return filing, and for
notices, GST notice reply services. If something is already wrong, contact us.
Frequently Asked Questions (FAQs)
Generally yes, from the first sale, because the turnover exemption does not apply to goods suppliers selling through an e-commerce operator that collects TCS. A narrow exemption for some small intra-state goods sellers exists, so confirm before relying on it.
Tax collected at source: the marketplace withholds 0.5% of your net taxable sales and deposits it with the government, under Section 52 of the CGST Act.
No. It is an advance towards your own GST liability, credited to your electronic cash ledger once accepted, and it offsets tax payable.
Compare the platform's monthly TCS report with the figure on your GST portal. Differences usually trace to returns, month cut-offs or the wrong GSTIN.
Marketplace goods sellers mostly cannot. Own-website sellers can stay unregistered below the standard thresholds, subject to the conditions that apply to their goods and states.
No. It is not available to sellers supplying through e-commerce operators or making inter-state supplies.
Yes. Each state where stock is held requires an additional place of business on your registration.
Yes. Transfers between your own GSTINs in different states are supplies between distinct persons and need a tax invoice with IGST.
Yes, if the invoice carries your GSTIN, appears in your GSTR-2B, falls within the Section 16(4) deadline, and the input is not blocked.
TCS is calculated on net sales, so returns reduce it. Issue credit notes and report them in the right period so your numbers match the platform's.
GSTR-1 monthly, GSTR-3B monthly, and an annual return where applicable. Quarterly options may apply to smaller taxpayers.
Check the response deadline, collect your reconciliation and platform reports, and reply within the time allowed. Missing the window makes an unfavourable order much harder to undo.