GST for E-commerce Sellers: TCS, Returns and Common Mistakes
Selling on Amazon, Flipkart, Myntra, Meesho or Pepperfry? Here is how your GST really works, month by month.
Tax Professional📅 31 Oct 2026⏱ 7 min read
1. Your sales come from many reports
A shop has one bill book. An online seller has a different tax report from every marketplace, each in its own format, plus offline bills. All of these must be combined into one correct GSTR-1. Missing even one platform's report, or counting a cancelled order, makes the return wrong.
2. TCS: the tax the marketplace keeps
Every e-commerce operator collects TCS (tax collected at source) on the net taxable value of sales made through it. From 10 July 2024 the rate is 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST). The marketplace reports it every month in GSTR-8.
- The TCS shows up on your GST portal as credit you can use to pay tax.
- It should match the sales you report. If the marketplace's figure and yours differ, you may get a mismatch notice later.
- Check the TCS figure every month, platform by platform, and raise a ticket with the marketplace when it is wrong.
💡 Real example: for one furniture seller, a single month's TCS on the portal was ₹1,670 short of what the sales report showed. Matching it order by order found the gap, and the seller raised it with the marketplace before it became a notice.
3. Place of supply decides IGST or CGST + SGST
For online sales, the place of supply is usually where the customer receives the goods. A Maharashtra seller shipping to Gujarat charges IGST; shipping within Maharashtra charges CGST + SGST. Marketplace reports give the customer's state for every order. Use it, because state-wise sales must be shown correctly in GSTR-1.
4. Returns, RTO and cancellations
- Cancelled before shipping: no sale, so no tax.
- Customer return after delivery: reduce the sale through a credit note, in the month of return.
- RTO (return to origin): the order never reached the customer; make sure it is not counted as a sale.
Sellers with high return rates often overpay GST simply because returns are not adjusted.
5. Warehouses in other states
If the marketplace stores your goods in its warehouse (for example FBA or Flipkart Smart Fulfilment), that warehouse is your place of business. In your home state, add it as an additional place of business. In another state, you need a separate GST registration there.
6. Purchases and ITC
Claim input tax credit only for bills that appear in your GSTR-2B. Marketplace commission, shipping and fee invoices also carry GST, and that GST is usually claimable as ITC if the marketplace has your GSTIN.
Most common mistakes we fix
- One platform's report forgotten in GSTR-1
- Returns and RTO not adjusted, so extra tax is paid
- Wrong state or wrong IGST / CGST split
- TCS not checked for months, then a mismatch notice arrives
- Wrong HSN code or tax rate, especially after the September 2025 rate changes
- Marketplace fee invoices not used for ITC
Selling on many platforms?
We combine every marketplace and your offline bills into one correct return each month.