GST for e-commerce sellers

Do you need GST registration?

Section 24 of the CGST Act requires persons supplying through an e-commerce operator that collects TCS to register regardless of turnover. Over time this has been relaxed:

• Service providers selling through operators, with turnover below the threshold, are exempt from compulsory registration.
• Small sellers of goods can, subject to conditions (such as selling only within their own state and having a PAN), supply through operators without registering, below the threshold.
• Composition taxpayers can supply goods through operators within their state.

The exact conditions are set by notification and have changed several times; check the current position on cbic-gst.gov.in before you list. Thresholds are covered in GST registration threshold.

TCS on your payouts

The operator collects TCS under Section 52 on the net value of taxable supplies made through it (sales less returns), at a notified rate, and reports it in GSTR-8. You accept the entries on the portal and the amount reaches your electronic cash ledger. The mechanics are in TDS and TCS under GST.

Example. In a month, sales through a marketplace are ₹5,00,000 and returns ₹40,000, both excluding GST. Net value ₹4,60,000. At a TCS rate of 0.5% (confirm the current rate), TCS is ₹2,300. Your settlement shows ₹2,300 less, and ₹2,300 reaches your cash ledger once accepted.

Place of supply on online orders

For goods, the place of supply is where delivery ends, which is the customer's address. An order from a buyer in another state is an inter-state sale with IGST, even though you never met the buyer. Your invoice must carry the buyer's state. See place of supply for goods.

What goes into your returns

The operator's GSTR-8 shows your supplies through it. Large gaps between that figure and your GSTR-1 are visible to the department.

Monthly reconciliation routine

1. Download the operator's sales, returns and settlement reports for the month.
2. Match order-wise sales to your sales register, and returns to credit notes.
3. Check the TCS amount on the settlement against the TCS shown on the portal.
4. Book commission, shipping fees and penalties as purchases with their GST.
5. Match the commission invoices with GSTR-2B before claiming ITC.
6. Clear the operator's party ledger to the actual payouts received.

Services where the operator pays the tax

For some services, such as passenger transport, accommodation and restaurant services supplied through operators, Section 9(5) makes the operator liable to pay the GST instead of the supplier. If you supply such services, do not charge GST yourself on those orders, and keep them out of your taxable sales in returns. This is general information, not tax advice.

Common mistakes

• Reporting marketplace sales net of commission. Your sale is the full price the customer paid; commission is a separate purchase.
• Charging CGST + SGST on every order because you are in one state, even when the customer is elsewhere.
• Ignoring returns that arrive in the next month, so GSTR-1 shows higher sales than the operator's net figure.
• Never accepting TCS entries, so the credit sits unused while you pay full GST in cash.
• Listing on a marketplace before checking whether registration is needed for your type of supply.

Keeping your Tally side clean

Record marketplace sales in TallyPrime with each operator as a party, so the operator's ledger shows sales, commissions, TCS and payouts together. Cashflow OS syncs that ledger to your phone, its GSTR-1 view prepared from your Tally data shows the month's B2C totals by state and rate, and reports export to Excel for matching against settlement files.