GST for Online Sellers in India: A Simple Guide (No Jargon)
GST registration, TCS deductions, GST on marketplace fees, input credit, monthly returns — everything an Amazon, Flipkart or Meesho seller needs to know, in plain language.
By Autobac Team — Editorial Team · September 3, 2026
GST is the paperwork wall that stops many Indian sellers from going online — and the silent leak that costs registered sellers money when they don't claim what's theirs. This guide covers exactly what an online seller needs: registration, the 0.5% TCS, input credit on marketplace fees, and the filings that keep your payouts flowing. Plain language, no jargon.
Do You Need GST Registration?
Selling goods on marketplaces (Amazon, Flipkart, Meesho): yes, regardless of turnover. The usual ₹40 lakh threshold doesn't apply, because marketplaces must collect TCS on your sales and that requires you to have a GSTIN. Marketplaces enforce this at registration — no GSTIN, no seller account.
The main exception: GST-exempt goods (certain books, unstitched fabric, and other exempt categories) can be sold with an enrolment ID instead of full registration on platforms that support it.
Registration itself is free on the government portal (gst.gov.in), needs PAN, Aadhaar, a bank account and address proof, and typically takes about a week. Beware of agents charging thousands for what is a free process.
The Deductions You'll See on Every Settlement
When a marketplace pays you, three tax-related lines appear:
| Line | Rate | What it is | Do you get it back? |
|---|---|---|---|
| TCS | 0.5% | GST collected at source by the marketplace (section 52) | Yes — credit in your GST ledger |
| TDS | 0.1% | Income-tax deduction on gross sales (section 194-O) | Yes — adjusts against income tax |
| GST on fees | 18% | GST the marketplace charges on ITS fees | Yes — input tax credit |
The pattern: none of these are costs if you file properly. All three are recoverable. Sellers who never reconcile them are quietly donating 1-2% of revenue plus 18% of all their fees.
TCS: The 0.5% Everyone Asks About
Under GST section 52, every marketplace collects 0.5% of your net taxable sales (the rate was cut from 1% with effect from 10 July 2024) and deposits it against your GSTIN. Each month, the marketplace files its own return; the amount then shows up for you to accept in the TCS section on the GST portal. Once accepted, it lands in your cash ledger and pays your GST liability.
Two practical rules: accept your TCS credits monthly (it takes minutes), and reconcile the marketplace's reported sales against your own — mismatches are how notices happen.
Input Credit on Fees: The Money Most Sellers Leave Behind
Marketplaces charge 18% GST on commission, closing fees, shipping, and ad fees — and issue you a proper tax invoice for it. That GST is input tax credit (ITC): it directly reduces the GST you owe on your sales.
On real numbers: a seller paying ₹40,000/month in marketplace fees pays ₹7,200/month in GST on those fees. Claimed as ITC, that's ₹86,400 a year back. Unclaimed, it's gone. Download your fee invoices from the seller portal every month and hand them to whoever files your returns.
Our marketplace fee calculators show GST-on-fees as its own line for exactly this reason — you should know what you're owed.
Which Returns You File
- GSTR-1 — your sales detail (monthly, or quarterly under QRMP for smaller turnover)
- GSTR-3B — summary return where you pay tax after ITC (monthly/quarterly)
- TCS credit acceptance — monthly, on the portal
- GSTR-9 — annual return above the turnover threshold
Charge GST on sales at your product's slab, subtract ITC (on fees, packaging, and other business inputs), apply TCS credits, pay the balance. A decent accountant runs this for a few thousand rupees a quarter — cheap insurance against blocked payouts and notices.
Common Mistakes That Cost Real Money
- Not claiming ITC on marketplace fees — the biggest and most common leak.
- Ignoring TCS credits — that 0.5% accumulates fast at volume.
- Wrong GST rate on products — slabs changed under GST 2.0 (Sep 2025) to 0/5/18/40%; verify your HSN code's current rate rather than copying a competitor.
- Missing filings — late fees are small; blocked TCS credits and frozen marketplace payouts are not.
- Selling from a different state than registered — stock kept in another state's warehouse (e.g. FBA) may need an additional place of business added to your registration.
Price With Taxes in the Math
GST isn't just compliance — it belongs in your pricing. Your selling price must cover product cost, marketplace fees, GST on those fees (until you claim it), and output GST on the sale. Our fee calculators model TCS, TDS, and GST-on-fees per unit for Amazon, Flipkart, and Meesho so your margin math matches your settlement reality. And if you'd rather have your whole online operation — listings, pricing, and growth — professionally managed, our e-commerce team works with Indian sellers every day.
_This article is general guidance, not tax advice — rates and rules change; confirm specifics with your CA. Updated September 2026._
Frequently Asked Questions
Is GST registration compulsory for selling online in India?
For selling goods on marketplaces like Amazon, Flipkart, and Meesho — yes, regardless of turnover, because marketplaces must collect TCS and that requires sellers to be registered. The main exceptions are GST-exempt goods (like certain books and unstitched fabric) where an enrolment ID works. The usual ₹40 lakh threshold does not save marketplace sellers of taxable goods.
What is the 0.5% TCS that marketplaces deduct?
Under GST section 52, every marketplace collects 0.5% tax at source on your net taxable sales (reduced from 1% with effect from 10 July 2024) and deposits it against your GSTIN. It is not a cost — it appears as credit in your GSTR-2X/cash ledger, which you claim while filing. Sellers who never reconcile TCS leave real money with the government.
Can I claim GST charged on Amazon and Flipkart fees?
Yes. Marketplaces charge 18% GST on their commission, closing, and shipping fees, and issue you a tax invoice for it. That GST is input tax credit (ITC) which directly reduces the GST you owe on your sales. On thin-margin products, claiming ITC on fees is often the difference between profit and loss — never skip it.
Which GST returns does an online seller have to file?
Typically GSTR-1 (sales details) and GSTR-3B (summary + payment) monthly, or quarterly under the QRMP scheme if turnover allows. You should also accept the marketplace's TCS in the TCS/TDS credit section each month. Annual return GSTR-9 applies above the threshold. Missing filings blocks your TCS credits and can freeze your marketplace payouts.