GST is the one compliance task that stops more Indian brands from scaling than any other. The fear is understandable — GST has its own terminology, its own portal, and its own filing schedule. But once you understand the fundamentals, it becomes a system, not a burden.
GST Basics for Ecommerce
GST (Goods and Services Tax) replaced 17 central and state taxes in 2017. For ecommerce, the key principle is: GST is charged at the point of supply (where goods are delivered), collected from the buyer, and remitted to the government monthly.
Do You Need GST Registration?
- Annual turnover above ₹20 lakh (₹10 lakh in special category states): Mandatory
- Annual turnover below ₹20 lakh: Optional but recommended for input tax credit
- Selling on marketplaces (Amazon, Flipkart): Mandatory regardless of turnover
- Selling via your own website to other states: Mandatory regardless of turnover
Marketplace TCS
Marketplaces like Amazon and Flipkart are required to collect Tax Collected at Source (TCS) at 1% of your taxable sales and deposit it with the government. This appears in your GSTR-2A and must be reconciled.
GST Rates for Common Ecommerce Categories
| Category | GST Rate | Notes |
|---|---|---|
| Apparel below ₹1,000 | 5% | Reduced rate for affordable clothing |
| Apparel above ₹1,000 | 12% | |
| Footwear below ₹1,000 | 5% | |
| Electronics | 18% | Most consumer electronics |
| Packaged food (branded) | 12% | FSSAI registered products |
| Beauty and personal care | 18% | Most categories |
| Books | 0% | Exempt |
| Handloomed textiles | 5% | Special rate |
Monthly Filing: GSTR-1 and GSTR-3B
- GSTR-1: File by 11th of every month — list all outward supplies (sales)
- GSTR-3B: File by 20th of every month — net tax liability after input credit
- Pay any tax due by the GSTR-3B filing date
- Reconcile TCS in GSTR-2A before filing GSTR-3B
Input Tax Credit: Your Cost Advantage
Input Tax Credit (ITC) lets you deduct GST paid on business purchases from GST collected on sales. If you pay ₹18 GST on packaging materials and collect ₹60 GST on sales, you only remit ₹42. This is significant — ITC on packaging, courier services, and raw materials can reduce your effective tax rate by 30–40%.
