GST for Ecommerce Sellers: A Plain-English Guide

Do online sellers need GST registration?

It depends on how and where you sell:

Own website vs marketplace: the key difference

When you sell through an e-commerce operator (a marketplace that collects payment for you), stricter rules apply: registration and TCS. A payment gateway like Razorpay or PhonePe is not an e-commerce operator — it only processes payment. So selling on your own website is treated like a normal business, except that shipping goods to another state still triggers compulsory registration. In practice, a D2C brand shipping across India needs GST from day one.

TCS: what marketplaces deduct

Marketplaces must collect Tax Collected at Source (TCS) on the net value of taxable supplies made through them — the rate was reduced from 1% to 0.5% in July 2024. The amount appears in your GST portal and can be claimed as cash in your electronic ledger to pay your GST. Own-website sales do not have TCS, because no operator collects the money.

How to register for GST

The online process on the GST portal.

• Time: 1–2 weeks

You'll need: PAN · Aadhaar · Business address proof · Bank details · Photographs

1. Apply on the GST portal

   Fill Part A with PAN, mobile and email, then verify with OTPs.

2. Complete Part B

   Business details, principal place of business, goods or services (HSN/SAC), bank account and authorised signatory.

3. Aadhaar authentication

   Opt in to speed up approval; otherwise physical verification may be needed.

4. Respond to queries

   Reply promptly if the officer asks for clarification.

5. Receive your GSTIN

   Display it on your website and invoices.

Documents you will need

• PAN of the business or proprietor.
• Aadhaar of proprietor, partners or directors.
• Proof of business address: rent agreement with NOC, electricity bill or property tax receipt.
• Bank statement or cancelled cheque.
• Incorporation documents for companies and LLPs; partnership deed for firms.

Home-based sellers can register with their home address if they have proof and permission.

GST rates on common ecommerce products

After the September 2025 GST rate rationalisation, most goods fall into 5% or 18% slabs. For example, clothing up to ₹2,500 per piece is taxed at 5% and above ₹2,500 at 18% (on the value after discounts). Rates depend on the HSN code, so look up each product and confirm with your accountant — wrong rates are a common source of notices. See also how to sell clothes online.

Invoices on your website

Every order needs a tax invoice with your GSTIN, invoice number, date, customer details, HSN codes, taxable value, and CGST + SGST (same state) or IGST (different state) based on the delivery address. A good ecommerce system generates these automatically. Try our free GST invoice generator for one-off invoices.

Returns and compliance calendar

• GSTR-1: outward supplies, monthly or quarterly.
• GSTR-3B: summary return and tax payment.
• Annual return where applicable.
• Marketplace sellers reconcile TCS shown by the operator with their own sales.

Small taxpayers may use the QRMP scheme to file quarterly while paying monthly. Late filing attracts fees and interest.

Can ecommerce sellers use the composition scheme?

Composition is a simplified scheme with a low flat rate for small businesses, but it has restrictions: it is generally not available for inter-state supplies of goods, and supplying goods through e-commerce operators has historically been restricted, with some relaxations for intra-state sellers. If you plan to ship across India, composition is usually not an option.

Common GST mistakes online sellers make

• Starting to ship to other states before registering.
• Charging IGST and CGST/SGST based on the seller’s state instead of the delivery state.
• Using wrong HSN codes or outdated rates.
• Not reconciling marketplace TCS and payouts.
• Ignoring returns and cancellations in GST filings.

What your website must handle

Your store should calculate tax by delivery state, print GST invoices automatically, store HSN codes per product, show prices inclusive of GST clearly, and export sales data your accountant can file from. These are standard in the custom stores we build. Kode Studio’s ecommerce stores start from ₹45,499 with GST invoicing built in.

A simple order of steps for new sellers

For a new D2C brand: finalise your business structure and bank account, register for GST, apply for a payment gateway using your GSTIN and website, set up your store with correct HSN codes and tax rules, then go live. Marketplace listings can follow once your GST registration is active. Doing GST first avoids having to pause sales later or redo invoices.

A note on professional advice

GST law changes through notifications and circulars, and your situation — business structure, products, states — matters. Use this guide to understand the landscape, then confirm registration, rates and filing with a chartered accountant. Kode Studio in Gachibowli, Hyderabad builds the technology; your CA handles the filings.

Frequently asked questions

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