GST on ecommerce sales: what to charge and when to file

Almost every confused conversation about GST and online selling is two questions treated as one. The first is whether you must register at all. The second is what you charge, what you put on an invoice, and what you file once you are registered.

The turnover thresholds people quote answer only the first question, and they answer it incompletely, because selling online can require registration regardless of turnover. That is the detail that catches new sellers: they read a threshold, conclude they are well below it, and start listing on a marketplace — which is one of the situations where the threshold stops being the operative test.

One caution before any of the figures below. Thresholds, rates, the tax collected by marketplaces and the exemptions around them are all set by notification and have all been revised more than once. Everything here is a description of the structure, which is stable, rather than a current rate card, which is not. Before acting, check the position against the current notification or with somebody who does this professionally.

The general registration thresholds distinguish goods from services. For a supplier of goods the threshold is aggregate turnover above ₹40 lakh; for a supplier of services it is ₹20 lakh. In the states designated special category the corresponding figures are lower — commonly ₹20 lakh for goods and ₹10 lakh for services — and which states fall into that group is itself something to confirm rather than assume, because the list has been amended.

Two features of 'aggregate turnover' surprise people. It is computed across India on the same PAN, not per state and not per business, so somebody running two small ventures adds them together. And it includes exempt supplies, not only taxable ones, so a business with a large exempt line can cross the threshold on the strength of turnover that carries no tax.

If you supply services rather than goods, note that the lower figure applies to you. A designer or consultant selling online is measured against the services threshold, which catches out sellers who read a goods-focused article and applied the higher number.

Section 24 of the Central GST Act lists categories of person required to register irrespective of turnover, and two of them routinely apply to online sellers.

The first is making interstate taxable supplies. A store on your own website that ships to a customer in another state is doing exactly that, so a business that would otherwise be comfortably under the threshold can be required to register from its early orders.

The second is supplying through an e-commerce operator required to collect tax at source — the marketplace case. On the face of Section 24 this made registration compulsory for marketplace sellers at any size, which was a substantial barrier for very small sellers.

That position has since been relaxed. A notification issued in 2023 exempted certain suppliers of goods through an operator from registration, subject to conditions including operating within a single state, staying below the threshold, and declaring PAN on the common portal. The conditions are specific and the relief has been under further discussion since. This is the single point in this article where the current notification matters most, and where an article — including this one — is the wrong source to rely on.

Once registered, the amount of tax on a given item is set by its rate, and the split between tax heads is set by where the supply goes.

When the place of supply is in your own state, the tax is charged as central GST plus state GST in equal halves. When it is in another state, the same total is charged as integrated GST instead. For goods, the place of supply is generally where the movement terminates for delivery to the recipient — in practice, the customer's delivery address drives it.

The total the customer pays is the same either way, which is why this feels like a technicality. It is not: charging the wrong head means an invoice that is wrong, a return that does not reconcile, and a correction to make later, possibly after the customer has claimed credit on it.

The practical requirement is that your store captures the delivery state accurately and applies the correct heads automatically. Manual determination is workable for a handful of orders a week and is a reliable source of error at any real volume, particularly where billing and shipping addresses are in different states.

You may display prices inclusive or exclusive of tax, and the requirement is that it is unambiguous. For a consumer-facing store, inclusive pricing is usually the better choice for a reason unrelated to compliance: a price that increases at checkout when tax is added is one of the more reliable ways to lose an order. Business-to-business sellers often do the reverse, because their buyers think in pre-tax terms.

A tax invoice needs, broadly: your name, address and GSTIN; an invoice number from a consecutive series for the financial year; the date; the recipient's details, with GSTIN where they have one; a description of the goods with HSN; quantity and taxable value; the rate and amount of tax shown under each applicable head; and the place of supply where the supply is interstate.

For marketplace sales the division of labour needs checking rather than assuming. The operator handles its own collection and reporting obligations, but the tax invoice to the customer is generally the seller's responsibility, and platforms differ in how much of it they generate on your behalf.

A registered seller files a return of outward supplies and a summary return in which tax is paid. Smaller taxpayers can opt into a quarterly return scheme with monthly payment, which reduces filing frequency without deferring the money — a genuine simplification for a small store, and one that has to be opted into rather than arriving by default.

Where you sell through a marketplace, the operator collects tax at source on the net value of your supplies through it and reports it. That amount is not a cost: it appears as a credit in your electronic cash ledger and is set against your liability. The rate at which it is collected has been revised by notification, so take the current figure from the notification rather than from any secondary source.

That is the closing point of the whole subject. The structure here — who registers, which head applies, what an invoice carries, what gets filed — is stable and worth understanding. The numbers attached to it are set by notification and change. Treat every figure as something to confirm at the moment you act on it, and keep a professional relationship for the cases where the answer is not obvious.