GST registration for e-commerce sellers in India — special rules you need to know
E-commerce sellers must register for GST regardless of turnover, unlike other small businesses that only need to register once they cross the Rs 40 lakh/Rs 20 lakh threshold. E-commerce operators (marketplaces) also deduct Tax Collected at Source (TCS) at 0.5% on the net taxable supplies made through their platform, which sellers can claim as credit against their own GST liability.
Why the turnover exemption doesn't apply
Under GST law, any person supplying goods through an e-commerce operator is required to register regardless of turnover — the standard Rs 40 lakh (goods) exemption threshold specifically does not apply to this category. This catches many small sellers by surprise, since they assume the same threshold rules apply as for an offline shop.
A narrower set of specified services sold through e-commerce operators does have separate exemptions, so if you're a service provider rather than a goods seller, it's worth confirming your specific category with a CA rather than assuming the goods rule applies to you.
Tax Collected at Source (TCS) by the marketplace
E-commerce operators like Amazon and Flipkart are required to collect TCS at 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST for interstate supplies) on the net value of taxable supplies made through their platform, and deposit it with the government. This appears in the seller's GSTR-2B/GSTR-2A and can be claimed as credit against the seller's own output tax liability when filing GSTR-3B.
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Talk to a CA →Multi-state registration for warehousing (FBA-style fulfilment)
If a seller stores inventory in a marketplace's fulfilment centres located in multiple states (as with Amazon's FBA-equivalent programs), the seller is generally required to obtain GST registration in each state where inventory is warehoused, since each warehouse constitutes an additional 'place of business' for GST purposes. This is one of the more operationally complex aspects of e-commerce GST compliance and is often missed by first-time sellers.
Composition scheme is not available to e-commerce sellers
Sellers who supply goods through an e-commerce operator are explicitly barred from opting for the composition scheme, even if their turnover would otherwise qualify. This means e-commerce sellers must use regular GST registration and file the full GSTR-1/GSTR-3B return cycle.
Reconciling TCS credit with return filing
A common practical issue is TCS credit reflecting in the seller's electronic cash ledger with a lag, or mismatching between the marketplace's TCS return (GSTR-8) and the seller's own records. Reconciling this monthly, before filing GSTR-3B, avoids credit being understated or claims being questioned later.
Do I need GST registration in every state where my marketplace stores my inventory?
In most cases, yes. If your goods are stored in a marketplace's warehouse in a particular state as part of a fulfilment program, that warehouse is typically treated as an additional place of business, requiring GST registration in that state. This is a common compliance gap for sellers using multi-state fulfilment — check your specific warehousing footprint with a CA before it becomes a notice.
This article is for general information only. For your specific situation, consult a practicing CA.
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