Running an online business is exciting, but when tax responsibilities arrive, confusion often follows. Small sellers who sell through platforms like Amazon, Flipkart, Meesho, or through their own websites must follow GST rules correctly. This guide explains how GST filings work for small online sellers in India in a simple, step-by-step way.
Why GST Matters for Small Online Sellers
GST means Goods and Services Tax. It is charged on all products and services sold in India.
GST has significance because of the following reasons,
- It figures out the tax to be charged by you on the sales made to customers
- It figures out the tax due from your side
- It allows you to utilize the GST input credit
- It guarantees that your company is following the law
In the case of online selling, the marketplaces keep the government updated with your sales data directly. Hence accuracy in GST returns is of utmost importance.
Who has to submit GST?
You are required to submit GST if,
- You are selling through an online marketplace
- You are selling through your own website
- Your company turnover exceeds ₹20 lakh (₹10 lakh for the special-category states)
- You are selling interstate
However, even small sellers who are selling part-time through marketplaces are still required to comply.
Types of GST Returns Small Online Sellers Must Know
| GST Form | Who Uses It | What It Contains |
| GSTR-1 | All registered sellers | Monthly/Quarterly invoice-wise sales |
| GSTR-3B | All sellers | Tax summary, input credit, liability |
| GSTR-9 | Annual return | Full year summary |
Additionally,
- Marketplaces file GSTR-8
- Sellers must reconcile with GSTR-1 and GSTR-3B
If data mismatches, tax notices may be issued.
What Online Sellers Must Report in GST Returns
While completing GST filings, online merchants were to declare their,
- Sales via marketplaces
- Sales through their online store
- Seller-funded discounts
- Shipping costs charged to buyers
- GST on each item sold
- Return and refund amounts
Marketplaces also withhold TCS (Tax Collected at Source) deductions, which must be reported.
Step-By-Step Process of Filing GST
The following is the easiest filing process,
1. Collect all invoices
Invoices show the product price + the GST percentage.
2. Sign in to the GST Portal
- Go to www.gst.gov.in
- Enter GSTIN, username, and password.
3. Enter outward supply information
It is done through GSTR-1.
It includes,
- customer name
- Invoice number
- GST category
- Product value
4. Submit GSTR-3B
This provides a summary rather than breaking it down by invoice.
5. GST Payment
This is a process that occurs post the ITC (Input Tax Credit) adjustment.
How Input Tax Credit Helps Sellers
Sellers who pay GST on their raw materials, shipping, packaging, or services can use the ITC to finally arrive at a lesser tax amount.
ITC is applicable for the following situations,
- Packaging materials
- Rent for warehouses
- Transport and courier costs
- Keeping accounting software subscriptions
Sellers are unable to claim ITC for,
- Personal expenses
- Fuel
- Food
- Fines
When ITC is accurately filed, GST filings become a source of revenue rather than an expense.
What Happens When Sales and Returns Mismatch?
Returns and cancellations are quite common in online selling.
For example,
Let’s say the total sales are ₹10,000. But the returns amount to ₹4,000. Then, you need to adjust GST either in the same month or the next month. If you don’t do it, the tax liability will increase.
Hence, it is very essential for the small businesses to keep a proper monthly record.
Marketplaces and GST Compliance
E-commerce sites provide the following assistance to the vendors,
- Calculating total sales
- Informing about the returned items
- Taking TCS from the seller
- Automatically uploading the data to GSTN
But the sellers must do the following,
- Verify the data
- Reconcile the sales
- File the correct figures
Incorrect dependence on the data provided by the marketplace can result in mistakes.
Monthly Checklist for Sellers
Before filing returns,
Keep Ready
- Sales report
- TCS summary
- Purchase bills
- Shipping invoices
Must Verify
- GSTIN printed on invoices
- Return values
- ITC claim values
Must Cross-Check
- GSTR-2B and purchase invoices
- Marketplace settlement reports
This, in turn, helps to avoid tax notices.
Common Mistakes in GST Filing
Small sellers usually,
- Do not reconcile return orders
- Claim wrong ITC
- Use wrong GST rate
- Do not record shipping income
- Miss filing deadline
In case the errors occur, additional tax or interest will apply.
Penalties for Late GST Filing
| Delay Type | Approx. Charges |
| Late filing fee | ₹50–₹100 per day |
| Late tax payment | 18% per year interest |
Small businesses must file returns on time even if there is zero sale. This is known as NIL filing.
How GST Filing Frequency Is Decided
The quarterly filing under the QRMP scheme is applicable in situations where, the turnover is not more than ₹5 crore
The following are the advantages,
- Reduced workload
- Reduced cost of compliance
Monthly filing is compulsory when, the turnover goes beyond ₹5 crore
Final tips to make GST filing easier
These are the easy practices,
- Keep invoices updated every day
- Use accounting software
- Download GSTR-2B monthly
- Keep evidence of purchase
- File NIL returns for months with low sales
The process of GST filing every month with complete accuracy gets rid of any concerns regarding notices and penalties.
Conclusion
GST may look complicated at first, especially for small online sellers, but once you understand your responsibilities, filing returns becomes routine. Sellers mainly need to track sales, adjust returns, compare marketplace values, and ensure taxes are paid on time. When GST filings are done correctly, there are fewer errors, smoother compliance, and better financial clarity. With the right record-keeping and consistent filing habits, GST becomes easy to manage even for new online sellers.
