GST Basics for E-commerce Sellers in India

This guide is general information, not tax advice. GST rules and rates change and depend on your specific products and turnover. Always confirm with a qualified chartered accountant or the official GST portal before acting.

Do you need a GST registration to sell online?

For ordinary businesses there is a turnover threshold below which GST registration is optional. But selling taxable goods through a marketplace changes the picture: e-commerce operators are generally required to collect tax at source, and in practice the major marketplaces require a GSTIN to onboard you for taxable goods. The upshot for most sellers of taxable products is simple — you will need a GST registration to sell.

Selling taxable goods via a marketplace typically requires a GSTIN regardless of turnover.
Some categories and small-turnover situations have relaxations — verify yours specifically.
Once registered, you must file returns on time even in months with no sales.

TCS — tax collected at source by the marketplace

E-commerce operators collect a small percentage of the value of your taxable supplies as TCS and deposit it against your GSTIN. It is not an extra cost — it is your own tax, parked with the government, which you reconcile and adjust in your GST returns. The practical effects:

Your marketplace payout is slightly reduced by the TCS amount.
That TCS shows up in your GST portal (in your TCS statement) to be claimed/adjusted.
You must reconcile the operator’s reported figures with your own sales records.

TCS is a cash-flow and reconciliation item, not a permanent loss — provided you file correctly and claim it. The exact TCS rate is set by law and has changed over time; confirm the current rate.

GST on the price the customer pays

The selling price of a taxable product is inclusive of GST at the rate applicable to that product (commonly 5%, 12%, 18% or 28% depending on the item). You collect that GST as part of the price and remit it. When pricing, remember a chunk of the headline price is tax you are merely passing through — it is not yours to keep.

Base price = Selling price ÷ (1 + GST rate) GST component = Selling price − Base price

GST on marketplace fees, and input tax credit

Marketplaces charge 18% GST on their commission, shipping and other fees. The good news: this GST, and the GST on other eligible business inputs (packaging, your inbound purchases), is generally available to you as input tax credit (ITC) — it offsets the GST you owe on your sales. Claiming ITC properly is what keeps GST from becoming a real cost.

GST paid on marketplace fees → eligible ITC.
GST paid on your stock purchases (from GST-registered suppliers) → eligible ITC.
Buy from unregistered suppliers and you lose that credit — factor it into sourcing decisions.

How GST changes your margin maths

Two practical rules keep GST from quietly eating your margin:

Price and compute profit on the base (ex-GST) value, not the GST-inclusive sticker — otherwise you overstate revenue by the tax you must remit.
Always claim ITC on fees and inputs; the 18% on marketplace fees is recoverable, so your true fee cost is lower than the gross deduction looks.

Stay compliant, stay paid

File GST returns on time every period, sales or no sales.
Reconcile marketplace TCS and tax reports against your books each cycle.
Keep purchase invoices from registered suppliers to support ITC.
When in doubt about rates, registration or filings, consult a CA — penalties cost more than the fee.

The eKIMAT profit & loss calculators separate the tax component from your real margin when you upload marketplace statements, so you can see net profit after GST rather than mistaking pass-through tax for income.