Check the latest rules: Tax rates, thresholds and section numbers change. This guide reflects the position at the time of writing (October 2026). Confirm with the latest notifications or with your accountant before filing.
Why Amazon seller accounting is different
A regular shop records a sale and receives the full amount. On Amazon, the platform sits in the middle. A customer pays Amazon, and Amazon pays you in settlements after deducting several charges, collecting taxes on your behalf and adjusting for returns. One settlement can combine hundreds of orders, refunds, fees and tax collections. If you book only the amount that lands in your bank, your sales, expenses and tax credits will all be wrong. (We covered the wider set of problems in our post on accounting challenges faced by e-commerce sellers. This guide goes deeper on Amazon.)
GST registration for Amazon sellers
Sellers of goods through an e-commerce operator like Amazon are generally required to register under GST regardless of turnover. Suppliers of certain services have a turnover threshold before registration becomes compulsory. Your GSTIN goes into your Seller Central account, and the sales you report in your GST returns need to match what Amazon reports about you. If you sell in several states through Amazon’s fulfilment centres, you may also need additional places of business in those states, so check this with your accountant before you start storing stock in multiple warehouses.
What Amazon deducts from your payout
| Item | What it is | Typical treatment in your books |
|---|---|---|
| Platform fees | Referral fee, closing fee, shipping or fulfilment fee, storage and advertising charges | Expense, with GST charged on the fee invoice |
| GST TCS | Tax collected at source by the operator under section 52 of the CGST Act (0.5% of net taxable value) | Receivable, shown as credit in your electronic cash ledger |
| Income-tax TDS | 0.1% of gross sales value, before fees and returns, under section 393(1) (earlier 194-O) | Tax already paid, claimed when you file your income-tax return |
| Refunds and returns | Amounts reversed when customers return items | Credit notes, reducing sales and GST liability |
| Reserve or holds | Amounts Amazon holds back for disputes or claims | Receivable until released |
GST TCS and how you get credit
Under section 52 of the CGST Act, an e-commerce operator collects tax at source from the payments it makes to sellers. The current rate is 0.5% in total, split as 0.25% CGST plus 0.25% SGST for supplies within the state, and 0.5% IGST for supplies between states, applied to the net value of taxable supplies made through the platform, after deducting returns.
The operator reports what it collected for each seller in GSTR-8, normally filed by the 10th of the following month. Only once the operator has filed this return does the amount get credited to the seller’s electronic cash ledger. You can use it to pay your GST liability, and if there is an excess balance you can claim a refund under section 54. Because the credit depends on the operator’s filing, it can differ from your own figures, which is why the monthly reconciliation below matters.
Income-tax TDS on e-commerce sales
Amazon also deducts income-tax TDS at 0.1% of the gross value of your sales, calculated before Amazon’s fees and before returns are adjusted. This is different from GST TCS, which is worked out on net taxable value after returns, so the two will not be the same number. From 1 April 2026 this falls under section 393(1) of the Income-tax Act, 2025, which replaced section 194-O of the older Act, at a rate of 0.1%. For a resident individual or HUF there is a ₹5 lakh yearly threshold, below which no TDS applies if your PAN or Aadhaar has been furnished. For other sellers, such as companies and firms, there is no threshold. The tax deducted appears against your PAN in Form 26AS and your Annual Information Statement, and you claim it when you file your return. Check these statements against Amazon’s certificates every quarter.
Fees, GST on fees and input tax credit
Amazon’s fees are a business expense, and they carry GST. If you are registered and the fees relate to your taxable sales, you can generally claim input tax credit on the GST charged, provided the invoice is correct and shows up in your GSTR-2B. Amazon issues fee invoices to you in your Seller Central account, so download these every month rather than relying on the settlement total. Record fees by type (referral, fulfilment, storage, advertising) so that you can see your true margin on each product.
Returns, refunds and inventory
- Returns: each return reduces your sales and your GST liability, and it needs a credit note. A return reported in a later month than the sale must be adjusted in the right period.
- Inventory: items sitting in Amazon’s warehouses are still your stock. Track them by location, and add returned goods back only when they are in sellable condition.
- Damaged or lost stock: reimbursements from Amazon are income or a reduction in cost, depending on the case. Record them rather than ignoring the credit.
Monthly reconciliation checklist
- Download the settlement or payment reports and the sales reports for the month from Seller Central.
- Match total sales, returns and refunds with the figures you will report in GSTR-1.
- Check the TCS shown in your electronic cash ledger against the TCS in the settlement reports.
- Download the fee invoices and compare the GST on them with your GSTR-2B before claiming ITC.
- Check that TDS deducted is recorded, and later compare it with Form 26AS or your AIS.
- Match the bank credits with the settlements, including any reserves or holds.
- Update stock quantities, and book reimbursements for lost or damaged items.
- File GSTR-1 and GSTR-3B on time, with the numbers tied back to the above.
Common mistakes Amazon sellers make
- Booking only the bank payout instead of gross sales, fees, TCS and TDS separately.
- Not reconciling TCS credits, so that cash ledger balances go unused.
- Claiming ITC on fees without checking the invoice appears in GSTR-2B.
- Reporting sales in GSTR-1 that do not match Amazon’s own reports, which can attract notices.
- Ignoring returns that cross month ends.
- Missing TDS credit because PAN or details in Seller Central are wrong.
FAQs
Do I need GST registration to sell on Amazon in India?
Sellers of goods through an e-commerce operator are generally required to register regardless of turnover, while suppliers of certain services have a threshold. Confirm your own case with your accountant.
What is GST TCS for Amazon sellers?
It is tax collected at source by Amazon under section 52 of the CGST Act, currently 0.5% of the net taxable value of your supplies on the platform. It is credited to your electronic cash ledger only after Amazon files its GSTR-8.
What is the TDS rate on Amazon sales?
0.1% of the gross sales value, before Amazon’s fees and returns, under section 393(1) of the Income-tax Act, 2025, which replaced section 194-O from 1 April 2026. Resident individuals and HUFs with sales up to ₹5 lakh in a year are not subject to it, if PAN or Aadhaar is furnished.
Can I claim GST on Amazon’s fees?
Generally yes, if you are registered, the fees relate to taxable sales, and the invoice appears in your GSTR-2B. Always check the invoice before claiming.
How often should I reconcile my Amazon accounts?
Every month, before you file GSTR-1 and GSTR-3B.
Call +91-85888-99292 or email contact@metaccounts.in for a free consultation. See our accounting and GST services.
Sources: Taxscan on GSTR-8 and TCS, GST Council FAQs on TCS and TDSMan on TDS under section 393(1). Rates and thresholds can change, so please check the latest notifications. This post is for general information and is not tax or legal advice.