GST registration is a must have to sell on Amazon

Introducing you to Ravi, whose main stream businesses was to sell designer dress materials at a local community. Ravi, seeing the positive response from the current customers, decided to scale the business, the famous “want to sell on Amazon and Flipkart” stuff. Ravi, little did he know that GST registration is a must have to sell on Amazon, which was taken by surprise. Being a micro business man, neither did he have any other registrations in place nor had an office, he was perplexed.

When Ravi reached out to us, on counsel application, he was clear that he wanted to scale up his business by selling online on Amazon, he already had a chat with seller support team from Amazon that GST registration would be a must, only question that he had was ‘’how to register and what is required’.

We helped Ravi in getting registration done seamlessly in a day. Ravi was happy to have the major hurdle removed. During the course of our discussion with Ravi, he had some good questions on GST, and this blog will help online sellers to get some clarity.

 “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network and an “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce like Amazon.

 Amazon, does not have any threshold exemption under GST and is liable to be registered irrespective of the value of supply made by them. Amazon is required to collect an amount at the rate of one percent (0.5% CGST + 0.5% SGST) of the net value of taxable supplies made through it. The amount so collected is called as Tax Collection at Source (TCS).

Amazon would  make the collection during the month in which the consideration amount is collected from the recipient. The amount collected by Amazon is to be paid to the government within 10 days after the end of the month in which amount was so collected.

This amount of TCS paid by the Amazon to the government will be reflected in the GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by Amazon. The same can be used at the time of discharge of tax liability in respect of the supplies made by the actual supplier.

Ecommerce Operators who should collect TCS:

  • A supplier selling his products through a web site hosted by him
  • A Platform that purchases goods from different vendors and sells them under their own billing.
  • A Platform that acts as an online marketplace and enables E- commerce activities


GST Registration process

GST Registration process

Major Changes in the Taxation system regarding online marketplaces post GST Implementation:

  • Post GST, there will be standard tax rates for each product and tax arbitrage will not be possible, thus bringing e-retailers and offline sellers at par in terms of costing and pricing. 
  • While GST registration in normal circumstances is mandatory where turnover is INR20 Lakh or more, if a trader wishes to sell through online portals he needs to get registered irrespective of turnover.
  • Majority of the products sold online carry a return date of up to 30 days which translates into about 15 – 20 million transactions per month and the returns and refunds for these have to be done with utmost care. The returns are required to be filed monthly now by both parties and refund adjustment will need special attention impacting tax liability.
  • The output rate of tax could be higher for the company compared to the current service tax rate. However, the companies should have a higher credit pool than they do in the current regime, which could reduce the prices of their services.
  • Currently, e-commerce companies discharge their output service tax liability through centralised registration. But under GST, e-commerce companies would have to obtain registration in each state where they have their place of business, resulting in increased compliances.

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