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    Tax for e-commerce sellers in India

    Selling goods online is a business, so use presumptive Section 44AD (6% digital, 8% other). Marketplaces collect 1% GST TCS under Section 52 and deduct income-tax under Section 194O, both reclaimable, and GST registration is usually mandatory for online sellers (with a narrow exemption for small intra-state-only sellers). The composition scheme is not available to e-commerce sellers, and reconciling platform statements to your returns is essential.

    Presumptive + GST + TDS at a glance

    Presumptive taxation

    Section:
    Sec 44AD
    Deemed profit rate:
    6% on digital receipts / 8% on other receipts
    Classification:
    business

    GST treatment

    Slab:
    18%
    SAC:
    goods at applicable HSN rate; marketplace collects 1% TCS under Section 52
    Composition eligible:
    No
    Reverse charge (RCM):
    Not applicable

    TDS exposure

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

    Selling goods online in India is a business, so presumptive taxation is under Section 44AD. The features unique to e-commerce are the platform deductions and the registration rule: a marketplace collects 1% TCS under Section 52 of the CGST Act and deducts income-tax under Section 194O, and GST registration is usually mandatory for online sellers, with only a narrow relaxation for small intra-state sellers. Reconciling platform statements to your returns is the core discipline.

    What business structure do e-commerce sellers use?

    The common patterns for e-commerce sellers are: Sole proprietor, simplest, suits most small marketplace and D2C sellers on 44AD, Partnership or LLP, for co-founders sharing inventory and capital, Private limited, for a scaling D2C brand or investor-backed seller. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

    Income tax: Section 44AD, reconciled to platform reports

    An online seller of goods is a business, so presumptive taxation is under Section 44AD at a deemed 6 or 8% of turnover. Because almost all receipts come through the platform and payment gateways, your turnover is highly visible, the platform reports your gross sales and deducts income-tax under Section 194O. The key task is reconciliation: the sales the marketplace reports must match the turnover in your return, because mismatches are a leading scrutiny trigger. The 194O tax is reclaimed through your return.

    An online seller declares deemed profit of 6 or 8% under Section 44AD; the marketplace deducts income-tax under Section 194O on gross sales, reclaimed via the return. (Income-tax Act 1961 ss.44AD/194O (Income-tax Act 2025 ss.58/393))

    GST registration is usually mandatory

    Persons supplying goods through an e-commerce operator generally must register for GST under Section 24, regardless of the Rs 40 lakh threshold, especially for inter-state sales. A narrow relaxation (effective 1 October 2023) exempts small sellers making only intra-state supplies through a marketplace, below the threshold, subject to conditions. So most marketplace sellers register; an intra-state-only micro seller may not have to. The composition scheme is not available to sellers supplying through a marketplace.

    Online sellers generally must register for GST (Section 24), with a narrow exemption for small intra-state-only marketplace sellers; composition is not available to e-commerce sellers. (CGST Act 2017 s.24 (compulsory registration) + s.10(2) (composition exclusion); relaxation notification 1 October 2023)

    Marketplace TCS under Section 52

    The marketplace collects 1% TCS (Tax Collected at Source) on the net taxable value of your sales through it under Section 52 of the CGST Act and deposits it against your GSTIN. You claim that TCS as a credit in your GST returns. This is separate from the income-tax deduction under Section 194O. Match both the GST TCS and the income-tax 194O figures in the platform statements against your records each month.

    Marketplaces collect 1% GST TCS under Section 52 on your net sales, claimable as a credit; this is separate from the income-tax Section 194O deduction. (CGST Act 2017 s.52 (TCS by electronic commerce operator))

    Allowable expenses

    CategoryExamplesTax treatment
    Inventory (cost of sale)Goods purchased for resale, packagingCost of sale; GST input credit on purchases if registered
    Platform and payment feesMarketplace commission, shipping, payment-gateway chargesDeductible business expense
    Warehousing and logisticsStorage, fulfilment fees, courierDeductible if keeping books; in deemed profit under 44AD
    AdvertisingSponsored listings, social ads, photographyDeductible business expense
    AdminAccounting software, GST filing, accountant, phoneDeductible (apportion personal phone use)

    Vehicle and travel costs

    Vehicle costs are usually minor for a marketplace seller using courier fulfilment. Where a delivery vehicle is used for the business, costs are deductible under regular books, or treated as included in the deemed profit under Section 44AD.

    Capital allowances and equipment

    On regular books, packing equipment, computers and any warehouse fittings depreciate (computers generally 40% WDV, equipment 15%). Under Section 44AD no separate depreciation is claimed, but keep invoices for the written-down value on any later sale.

    Worked example

    Sanjay — Surat, GJ

    marketplace seller of textiles (Amazon and Flipkart) (2026-27)

    Annual sales Rs 60 lakh through marketplaces, inter-state. Platforms deduct 194O income-tax and collect 1% GST TCS under Section 52. He buys stock from local wholesalers.

    He must be GST-registered (inter-state e-commerce supply). For income tax, deemed profit under 44AD is 6% of Rs 60 lakh = Rs 3,60,000, near the Rs 4 lakh new-regime exemption, so little or no income tax, and he reclaims the 194O TDS. For GST, he charges the applicable goods rate, claims input credit on stock purchases, and claims the 1% Section 52 TCS the marketplaces collected as a credit. Each month he reconciles both the 194O and the Section 52 figures in the platform statements against his books.

    Common audit triggers for e-commerce sellers

    Frequently asked questions

    Do I have to register for GST to sell online?+
    Usually yes. Persons supplying goods through a marketplace generally must register under Section 24, especially for inter-state sales, regardless of the Rs 40 lakh threshold. A narrow relaxation from 1 October 2023 exempts small sellers making only intra-state supplies through a marketplace, below the threshold. Most marketplace sellers register; an intra-state-only micro seller may not have to.
    What are the two deductions the marketplace makes?+
    Two separate things: 1% GST TCS under Section 52 of the CGST Act (collected on your net sales and claimable as a GST credit), and income-tax under Section 194O (deducted on your gross sales and reclaimed through your income-tax return). Reconcile both against your records each month.
    Can an e-commerce seller use the composition scheme?+
    No. The composition scheme is not available to persons supplying goods through an e-commerce operator. You account for GST under the regular scheme at the applicable goods rate, with input credit on your purchases and credit for the 1% Section 52 TCS the marketplace collects.
    What is the most common e-commerce tax mistake?+
    Not reconciling. Because the platform reports your sales (Section 194O) and collects TCS (Section 52), your turnover is fully visible to the department. If the platform-reported sales do not match the turnover in your return, it is a leading scrutiny trigger. Reconcile platform statements to your books every month.

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