Every online seller's first month has the same shape: product photos, pricing, a listing page, the first order. Compliance shows up later — usually as a marketplace asking for a GSTIN before it will release a payout, or an accountant asking for six months of settlement reports you never downloaded.
The takeaway up front: the compliance work for an online store is cheap to do before launch and painful to reconstruct afterwards. Not because the rules are harsh, but because online selling generates a specific kind of mess — thousands of small transactions, across states, with a platform sitting between you and your money, deducting things. Set up the plumbing first and it stays boring.
This is general operational guidance, not tax or legal advice. Indian GST rules, thresholds, exemptions and filing cycles change — several of the rules below have been amended more than once — so confirm the current position for your business before you rely on it.
Marketplace or own store? The compliance path differs
Selling on a marketplace (Amazon, Flipkart, Meesho, and the rest) means an e-commerce operator sits between you and the buyer. That operator has its own statutory obligations, and those obligations reach into yours: onboarding checks, tax collected at source on your sales, and settlement reports you'll need at filing time.
Selling on your own store removes the operator layer, but you take on what it was doing — collecting the right tax, issuing compliant invoices, and handling returns yourself. Your payment gateway is not an e-commerce operator in this sense; it settles money, it doesn't handle your tax position.
Most sellers eventually do both, which is fine — but it means two sets of records that have to reconcile into one set of books. Plan for that from the start rather than discovering it in your first annual filing. Our broader ecommerce operations guide covers the workflow side of running both channels without duplicating effort.
GST registration: don't assume the ordinary threshold applies
For an ordinary business, GST registration becomes mandatory once turnover crosses a prescribed threshold that varies by type of supply and by state. Selling through an e-commerce operator has historically worked differently — suppliers of goods through such platforms have generally been required to register regardless of turnover, and later amendments introduced routes for certain small suppliers to sell through platforms without full registration, subject to conditions.
That's a genuinely moving target, and the honest advice is: do not decide this from a summary. Ask the marketplace what it requires to onboard you (they will tell you plainly, because they can't pay you otherwise), and confirm your legal position with a professional. What matters strategically is that "I'm small, so I don't need to register" is a reasonable assumption for a local shop and a dangerous one for a marketplace seller.
Also worth knowing early: registration is state-wise, tied to your place of business. If you hold stock in a fulfilment centre in another state, that can create an additional registration requirement. Sellers who join a platform's fulfilment programme without thinking about this are the ones who get a surprise later.
Invoicing basics that scale
Once registered, your invoices need to carry the required particulars — your GSTIN, a sequential invoice number, the buyer's details, a description of goods with the correct HSN code, the taxable value, and the tax split. Two things bite online sellers specifically:
- Classification is your responsibility. The HSN code and rate applied to your product are your call, not the platform's. Getting a category wrong across thousands of orders is a systematic error, not a one-off.
- Numbering must be sequential and unbroken, across every channel. Two sales channels each generating their own invoice series is a common and fixable mistake — decide the scheme before you turn on the second channel.
Place of supply: why the tax split changes by order
An order shipped within your own state and an order shipped to another state are taxed differently — broadly, intra-state supplies carry the central and state components, inter-state supplies carry the integrated one. For an online seller this isn't an edge case; it's most of your order book, decided by the buyer's shipping address.
This is why manual invoicing stops working almost immediately. Whatever system you use — the marketplace's, your store platform's, or your accounting software — needs to determine the split per order automatically and record it in a form you can file from. Test it with a real out-of-state order before you scale.
Marketplace TCS and the reconciliation habit
Marketplaces collect tax at source on the net value of sales they facilitate and report it. That collected amount is credited to you and shows up in your GST portal, where it can be set against your liability — but only if your books and the platform's report agree.
That agreement is not automatic. A single settlement payout typically bundles gross sales, commission, fulfilment and shipping fees, promotional charges, returns, refunds, and TCS — and what arrives in your bank is a net number that matches none of your sales figures. The discipline is simple and non-negotiable:
- Download settlement and tax reports monthly, on a fixed day. Platforms don't retain them forever.
- Reconcile three things every month: your recorded sales, the platform's report, and the bank credit.
- Book fees as expenses, not as reductions in sales, so your revenue figure stays true.
- Track returns and credit notes properly — a refunded order isn't just a reversed payment, it has a documentation trail.
Sellers who skip this don't discover the gap until an annual filing, by which time the reports may be gone and the reconstruction is billed by the hour.
The registrations people forget
Depending on what you sell and where:
- FSSAI for food products.
- IEC (Import Export Code) if you're importing stock or selling abroad.
- Trademark registration, which several marketplaces require for brand-owner programmes and which is the only thing that gives you real leverage against copycat listings.
- MSME/Udyam registration, commonly used for benefits and for supplier relationships.
- Legal metrology / packaging declarations for pre-packed goods.
- PF/ESI once you employ people past the applicable limits.
You don't need all of these. You need the ones that match what you actually sell — obtained before someone asks for a number you don't have, because listings do get pulled over exactly this.
And then the annual layer
Beyond the recurring GST returns, there's an annual return for registered taxpayers, an income tax return for the business, and — above certain limits — audit requirements. Add ROC filings if you incorporated a company or LLP. None of it is difficult when the monthly reconciliation was done. All of it is miserable when it wasn't.
Where to get help
If you're a first-time seller, the two moments genuinely worth a professional's time are set-up (what to register for, in which states, with what invoicing configuration) and the first annual cycle (when the year's habits get tested). A compliance practice such as Kunj Tax Advisory — which works with e-commerce sellers, exporters and small businesses across India on GST registration and returns, accounting, and ROC compliance — is the kind of engagement where a few hours up front prevents a structural error that repeats across every order you ship.
Not because you can't learn it. Because the cost of learning it in production is measured in listings taken down and interest on tax paid late.
Think about the engagement shape, not just the fee
Worth deciding early, because it changes what compliance costs you over a few years: an online store's obligations are recurring, not one-off. Monthly returns, monthly settlement reconciliation, an annual layer on top, and a fresh question every time you add a channel or a product category. Priced per filing, that becomes an unpredictable line item you're tempted to skip in a slow month — which is exactly the month a return gets missed.
The alternative is a retainer: a fixed recurring fee covering the whole compliance load instead of an invoice per return. Some practices structure this as a long-term commitment — Kunj Tax Advisory, for instance, publishes a long-term reimbursement plan that bundles its nine practice areas into one flat monthly fee across a fixed term. Arrangements like that can suit a business with steady, repeating filings, and they're a poor fit for one with lumpy or uncertain trading.
Either way, treat a multi-year commitment the way you'd treat any other: read the eligibility conditions, the payment terms, and the agreement that actually governs it — not the summary on the page — and be clear on what happens if your turnover band changes or you pause trading. That's ordinary diligence, not scepticism.
FAQ
Do I need GST registration to sell on a marketplace in India? Marketplace selling has historically carried registration requirements different from the ordinary turnover threshold, and the rules have been amended. Ask the platform what it requires to onboard and pay you, and confirm your legal position with a professional — don't assume the ordinary threshold applies.
Is the TCS a marketplace deducts an extra cost? No — it's tax collected on your behalf and credited to you, usable against your liability. It only becomes a problem if your records don't reconcile with the platform's reports.
Can I use one invoice series across my own store and a marketplace? You need a consistent, unbroken numbering scheme across your business. Decide the structure before adding the second channel; retrofitting an invoice series is unpleasant.
Is it safe to run compliance myself with software? Software handles the arithmetic and the splits well. It doesn't decide your registration position, your product classification, or whether stock in another state triggers a new requirement. Use the tools for volume; get the judgement calls checked.
General information, not tax or legal advice. Indian GST and e-commerce rules change frequently — confirm the current requirements for your business with a qualified professional. For registration, returns, and the accounting behind them, Kunj Tax Advisory works with online sellers across India; get in touch if you'd rather have your set-up checked before the first order than after the first filing.
