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Amazon Seller Compliance Guide for Indian Sellers – Complete 2026 Guide

Written by

Financial Analyst

in

Selling on Amazon India is a massive opportunity, but it also comes with strict tax, legal, and operational compliance requirements. Whether you are a new or experienced seller, staying compliant is essential to avoid penalties, account suspension, or payment holds.

This complete guide explains GST compliance, TDS rules, Amazon reports, accounting requirements, trademark/FSSAI registrations, return reconciliation, and annual compliances every Amazon seller must follow.

1. Business Registration Requirements

You can sell on Amazon under:

  • Proprietorship
  • Partnership Firm
  • LLP
  • Private Limited Company

Amazon does not allow unregistered individual selling for most categories.
For scaling, LLP or Pvt. Ltd. is preferred due to better compliance management and brand credibility.

2. GST Registration & Compliance

2.1 When is GST Mandatory for Amazon Sellers?

GST registration is required when:

  • You sell goods online
  • You sell outside your state (inter-state supply)
  • Amazon collects TCS under GST

Threshold exemptions do not apply for e-commerce sellers.

2.2 Monthly GST Returns

Amazon sellers must file:

  • GSTR-1 – outward sales
  • GSTR-3B – tax payment summary
  • GSTR-2B reconciliation – purchase credit reconciliation

2.3 Amazon GST Reports

You must reconcile:

  • Sales reports
  • Returns
  • Commissions
  • Shipping charges
  • Packaging fees
  • Refund adjustments

Accurate reconciliation ensures correct ITC and avoids mismatches during GST audits.

3. TCS & TDS Requirements for Amazon Sellers

3.1 GST TCS by Amazon

Amazon deducts TCS @ 1% on your net sales and deposits it into your GST portal.
You must claim this credit during GST filing.

3.2 194-O TDS (Income Tax)

Under Section 194-O, Amazon deducts TDS @ 1% on gross sales.
This TDS reflects in your Form 26AS and reduces your income tax liability.

4. Invoicing & Accounting Compliance

4.1 GST-Compliant Invoices

You must issue invoices containing:

  • GSTIN
  • HSN code
  • Tax rate
  • Seller details
  • Product details
  • Amazon shipment ID

4.2 Books of Accounts

Amazon sellers must maintain:

  • Sales register
  • Purchase register
  • Expense ledger
  • Stock/inventory records
  • Amazon fees and commissions
  • Return and refund registers

These records are compulsory under GST and Income Tax.

5. Amazon Category-Specific Compliance

Depending on your product category, you may need additional licenses:

5.1 FSSAI License

Required for:

  • Food
  • Beverages
  • Supplements
  • Consumables

5.2 Trademark Registration

Recommended for:

  • Brand Registry
  • Protection from hijackers
  • A+ content creation

5.3 BIS / ISI Certification

Mandatory for:

  • Electronics
  • Helmets
  • Appliances
  • Toys

Non-compliance can lead to product removal or account suspension.

6. Return, Refund & Reconciliation Compliance

6.1 Why Reconciliation Is Critical

Amazon makes adjustments for:

  • Returns
  • Damaged items
  • Reimbursements
  • Lost shipments
  • Claims

You must reconcile:

  • Amazon Settlement Reports
  • Orders vs Payments
  • TDS/TCS credit
  • Inventory mismatches

Proper reconciliation avoids financial loss and tax mismatches.

7. Income Tax Compliance for Amazon Sellers

7.1 Types of Taxable Income

Your taxable income =
Amazon sales – purchase cost – expenses – Amazon fees – other deductions

7.2 ITR Form Selection

  • Proprietorship: ITR-3 or ITR-4 (Presumptive Income)
  • Partnership/LLP: ITR-5
  • Private Limited: ITR-6

7.3 Tax Audit Rules

Tax audit is applicable if:

  • Turnover exceeds INR 1 crore
  • OR turnover exceeds 10 crores with digital receipts (95%+)

8. Annual Compliance Requirements

For Proprietors

  • GST returns
  • Income tax return
  • Books of accounts

For LLP / Company

  • Annual ROC filings
  • Financial statements audit
  • GST filings
  • Income tax returns

9. Penalties for Non-Compliance

Amazon sellers may face:

  • GST interest & penalties
  • Demand notices
  • Input tax credit denial
  • Account suspension
  • Higher TDS/TCS mismatch notices
  • Loss of Amazon reimbursements

Compliance prevents operational and financial disruptions.

10. How Saving Mantra Helps Amazon Sellers

We provide end-to-end Amazon Seller Compliance Management:

  • Business registration (GST, LLP, Pvt. Ltd., FSSAI, Trademark)
  • Monthly GST filing & reconciliation
  • TDS/TCS management
  • Amazon settlement reconciliation
  • Income tax filing for sellers
  • ROC & annual compliance for companies
  • Listing and GST audit preparation

Your compliance is always up to date—accurate, automated, and hassle-free.

Disclaimer

This article is for educational and informational purposes only. Compliance rules may vary based on business structure, product category, and tax laws. This content should not be treated as legal or tax advice. For personalised guidance, consult a qualified compliance professional. Saving Mantra is not responsible for decisions made based on this article.

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