GST compliance for an ecommerce seller in India comes down to a repeating cycle: register when you must, issue a correct tax invoice for every sale, file your outward supplies return (GSTR-1) and your summary return (GSTR-3B) on time, pay the tax, reconcile your sales against your returns and your payments, and keep records. Online sellers face extra friction because they sell across states, take returns constantly, receive money through payment gateways and couriers, and often sell on marketplaces as well as their own store.
This guide is a practical compliance manual for Indian online sellers. It lays out the obligations in the order they arise, explains which returns apply and when they are due using the GST portal's own guidance, shows why the composition scheme is closed to most online sellers, explains tax collected at source on marketplaces, covers input tax credit, e-way bills and multi-state selling, gives you a month-end reconciliation method with a worked example, and ends with a compliance calendar and a checklist. It is general information, not tax advice, and GST rules change often, so the sources are linked and you should confirm each point with a chartered accountant.
Quick answer: A registered online seller must issue tax invoices and credit notes correctly, file GSTR-1 by the 11th of the following month (or the 13th after the quarter under the quarterly scheme) and GSTR-3B by the 20th (or the 22nd or 24th after the quarter), pay any tax due, reconcile books to returns every month, and keep records. Sellers who ship goods to other states cannot use the composition scheme, and sellers who supply through marketplaces that collect tax at source have extra reporting to check.
The GST compliance cycle for an online seller
Think of GST as a monthly loop, not a one-off task. Each stage feeds the next, and an error early in the loop shows up as a mismatch later.
- Registration. Obtain a GSTIN when your turnover or circumstances require it, and keep your registration details current.
- Product set-up. Assign the right HSN code and GST rate to every product before you sell it.
- Invoicing. Issue a tax invoice for every taxable sale, and a credit note when a sale is reduced or returned.
- Collection and settlement. Money arrives through payment gateways and courier cash on delivery remittances, usually net of fees and with delays.
- Reconciliation. Match invoices, credit notes, payments and refunds for the month.
- Return filing. Report outward supplies in GSTR-1 and summarise liability in GSTR-3B.
- Tax payment. Pay the tax due, after setting off any input tax credit you are entitled to.
- Movement of goods. Generate e-way bills where they are required.
- Annual reporting and review. File annual returns where applicable and review the year with your accountant.
- Records. Keep invoices, credit notes, ledgers and supporting documents for the period the law prescribes.
The rest of this guide takes each stage in turn. Where a topic has its own detailed guide, such as GST invoice contents and who needs to register, we refer you to it rather than repeat it.
Stage 1: Registration and the composition scheme
Registration depends on your aggregate turnover, the nature of your supplies and where you sell. The Central Board of Indirect Taxes and Customs sets thresholds of ₹40 lakh for suppliers of goods and ₹20 lakh for suppliers of services, with lower limits in some special category states (CBIC, GST: An Update), and some supplies, such as those made through certain e-commerce operators, can require registration irrespective of turnover. Our guide to GST registration for online sellers walks through the decision. Confirm the current position on the official GST portal.
Why the composition scheme rarely suits online sellers
The composition scheme lets small taxpayers pay tax at a low flat rate and file simpler returns, so many new sellers ask about it. The GST portal's guidance on opting for the scheme lists conditions that exclude most online sellers: you cannot opt if you make inter-state outward supplies of goods, and you cannot opt if you supply through electronic commerce operators who are required to collect tax under section 52 (GST portal, Opt for Composition Scheme). An online store that ships to customers in other states makes inter-state supplies of goods, and a seller on a marketplace is supplying through an e-commerce operator, so in both cases the scheme is generally not available. If you are already in the scheme and begin selling in these ways, you need to look at withdrawing, so speak to your accountant before you expand your selling.
Stage 2: Product set-up, HSN and rates
Compliance starts in your catalogue. Each product needs an HSN code and a GST rate, and every invoice repeats that choice. If the classification is wrong, every sale of that product carries the wrong tax. Review the codes and rates with your accountant when you add a product, and again whenever the GST Council revises rates, which it does from time to time; check the current rate for each product on the GST portal or with your accountant, rather than relying on a rate you noted a year ago.
Keep a simple product tax register as a spreadsheet or inside your platform, with the product, HSN code, GST rate, the date the rate took effect and who approved it. When a rate changes, record the effective date, because orders placed before and after the change may need different treatment.
Stage 3: Invoices and credit notes
Every taxable sale needs a tax invoice with the particulars listed in Rule 46 of the CGST Rules, and every reduction needs a credit note with the particulars in Rule 53 (Rule 46, Rule 53). The invoice number must be consecutive, at most sixteen characters long and unique for the financial year. Our complete guide to GST invoices for online stores covers each field, with a worked example. For compliance purposes, the point is that invoices and credit notes are the source data for your returns: if they are wrong, your returns will be wrong.
Stage 4: Where the money comes from, and why it never matches
Online sellers receive money in several forms, and none of them equals the sales figure on your invoices. Understanding why saves hours at month end.
| Source of money | Why it differs from invoiced sales |
|---|---|
| Payment gateway settlements | Net of gateway charges, in batches, with a delay, and reduced by refunds |
| Cash on delivery remittances | Collected by the courier, remitted days or weeks later, net of any COD fee |
| Refused or undelivered COD parcels | Invoiced but never paid, so the sale must be reversed |
| Marketplace payouts | Net of commission, fees and tax collected at source |
| Offline counter sales | Cash, UPI and card, banked on different days |
| Refunds and chargebacks | Reduce money received without changing the original invoice, until a credit note is issued |
A clean compliance process does not try to make these equal. It reconciles them: for each period, it shows how invoiced sales turn into money received, with every difference explained.
Stage 5: Reconciliation, month by month
Reconciliation is the single most valuable habit in GST compliance. Do it before you file, so that the returns reflect reality.
A four-way match
- Orders to invoices. Every dispatched order has exactly one invoice, and every invoice has an order. Cancelled orders before dispatch should not have taxable invoices.
- Invoices to credit notes. Every return, cancellation after invoicing or post-sale discount has a credit note that refers to the original invoice.
- Invoices to your books. The total of invoices and credit notes in your sales ledger equals the platform's sales report for the period.
- Books to returns. The taxable value and tax in your GSTR-1 and GSTR-3B match your books.
A worked example
The figures are assumed for illustration and use a single 18% rate to keep the arithmetic simple. A store has the following month:
| Line | Amount including GST | Taxable value | GST |
|---|---|---|---|
| Orders placed by customers | ₹1,60,000 | ||
| Less cancelled before dispatch (no invoice) | ₹10,000 | ||
| Invoiced sales | ₹1,50,000 | ₹1,27,119 | ₹22,881 |
| Less credit notes for returns | ₹12,000 | ₹10,169 | ₹1,831 |
| Net sales for the return | ₹1,38,000 | ₹1,16,950 | ₹21,050 |
Check the arithmetic: ₹1,50,000 × 100 ÷ 118 is about ₹1,27,119, so the tax is ₹22,881. For the credit notes, ₹12,000 × 100 ÷ 118 is about ₹10,169, so the tax is ₹1,831. Subtracting gives net taxable value of ₹1,16,950 and net tax of ₹21,050. If the seller has eligible input tax credit of ₹3,000 for the month, for example on packaging, courier and platform fees, the tax to pay in cash would be ₹18,050. That credit is an assumption, and eligibility depends on conditions your accountant will check.
Now the cash view. Suppose the gateway settled ₹1,05,000 after fees and refunds, couriers remitted ₹25,000 of cash on delivery collections, and ₹8,000 of invoiced COD orders were refused and are still being returned. These do not add up to ₹1,38,000, and they should not: the gap is gateway fees, refunds, COD in transit and refused parcels. The reconciliation is a schedule that lists each of those items, so that the difference is explained rather than ignored.
Stage 6: The returns you file
Two returns carry most of the load for an ordinary online seller, and both are filed on the GST portal.
| Return | What it is | Who files it | Due date (monthly filers) | Due date (quarterly filers) |
|---|---|---|---|---|
| GSTR-1 | Statement of outward supplies: B2B invoices, B2C transactions, credit and debit notes, supplies through e-commerce operators, HSN summaries and nil-rated or exempt supplies | Every registered taxable person other than composition taxpayers and certain others | 11th of the following month | 13th of the month after the quarter |
| GSTR-3B | Simplified summary return declaring summary GST liabilities for the period | All normal taxpayers and casual taxpayers | 20th of the following month | 22nd or 24th of the month after the quarter |
The contents and due dates in the table come from the GST portal's own guidance on Form GSTR-1 and Form GSTR-3B. Due dates can be extended by notification, so check the portal each month.
The quarterly scheme (QRMP)
Taxpayers with aggregate annual turnover up to ₹5 crore in the current and preceding financial year, who have already filed their last due GSTR-3B, can opt for the Quarterly Return Monthly Payment scheme. The portal's guidance says that under it, both GSTR-1 and GSTR-3B are filed quarterly, while tax dues are paid every month through a challan (GST portal, QRMP scheme FAQs). For an online seller with many daily orders, the monthly payment still needs a monthly tally of sales and returns, so quarterly filing reduces the number of returns but not the need for monthly bookkeeping. Discuss with your accountant whether monthly or quarterly filing suits you.
Interest and late fees
Late payment attracts interest under section 50 of the CGST Act, as the GST portal's GSTR-3B guidance notes, and late filing attracts late fees, so filing on time matters even when there is no tax to pay. A nil return can be filed when there are no transactions and no liability to report, subject to the conditions the portal sets out. Ask your accountant for the current rates and amounts, because they are amended periodically.
Stage 7: Paying the tax
Tax is paid through the portal using a challan or by setting off credit from the electronic ledgers. The calculation is conceptually simple: output tax on your sales, minus credit notes, minus eligible input tax credit, equals the cash payable. Because the cash payable is usually much smaller than the tax collected, some sellers are tempted to treat the collected tax as working capital. Resist that. The tax collected from customers belongs to the government, and a month where cash is tight is exactly when late payment interest creates a spiral. A simple discipline is to move the GST portion of each day's sales into a separate account.
Stage 8: Input tax credit for online sellers
Input tax credit allows a registered seller to reduce the tax payable on sales by the GST paid on business purchases. For an online seller, candidates may include packaging materials, courier and logistics charges, platform and payment-related fees that carry GST, advertising and photography services, equipment, and software subscriptions. Whether a particular credit is eligible, and the conditions attached, depend on the law and your circumstances: for example, you need a valid tax invoice from a registered supplier, the supplier must have reported the sale, and some categories of purchase are blocked. Treat credit as something to verify with your accountant each month, not as an automatic deduction.
Platform fees deserve a specific note. ShopMate charges a flat 5% commission plus 18% GST on every order (ShopMate pricing), and our terms state that fees are exclusive of applicable taxes (ShopMate Terms and Conditions). Whether the GST on any platform fee can be claimed as credit depends on your own registration and how the expense is treated, so ask your accountant and record the invoices properly.
Stage 9: Selling through marketplaces
If you sell on marketplaces as well as your own store, additional rules apply. E-commerce operators are required to collect tax at source on the net value of taxable supplies made through their platforms by other suppliers, and they report it in a return called GSTR-8, which the GST portal describes as a statement of tax collected at source filed by e-commerce operators (GST portal, GSTR-8 FAQs). The portal's guidance notes that the rate of tax collected at source was reduced from 1% to between 0.5% and 1% in total from the July 2024 tax period, so check the current rate with your accountant. For you as the seller, the practical consequences are:
- Your payouts from the marketplace are net of commission and fees and of tax collected at source, so the payout is smaller than your invoiced sales.
- The tax collected at source appears in your records and your return data, and you should reconcile it with the marketplace's statements.
- Your GSTR-1 includes supplies made through e-commerce operators in their own section, as the GST portal's list of GSTR-1 contents shows.
- Registration requirements for sellers who supply goods through e-commerce operators are stricter than for selling only through your own store, as discussed in our beginner's guide to selling online.
Keep marketplace sales and own-store sales in separate series and separate reports, because their reconciliation differs.
Stage 10: E-way bills for goods in transit
An e-way bill is an electronic document that accompanies goods in movement. The e-way bill portal describes it as required for consignments above a value threshold, generally ₹50,000, with exceptions for specified goods and cases (e-way bill portal). Most consumer orders on an online store are far below the threshold, but a bulk order, a wholesale order or stock transfers between your own warehouses can exceed it. Because consignment value includes the tax, a few higher-priced items can cross the limit. Discuss with your accountant and your courier how e-way bills apply to your shipments, especially for inter-state wholesale or stock transfers, and check the current rules and any state-specific requirements on the portal.
Stage 11: Selling and storing across states
An online store sells nationally, but the GST registration is state-based. Issues to settle with your accountant early:
- Your home state and your delivery states. The tax split on each invoice depends on where you are registered and where the goods are delivered.
- Warehouses and fulfilment centres. Stock stored in another state may require an additional place of business or a separate registration there.
- Stock transfers. Moving your own goods between states is itself a supply for GST purposes in certain cases, with documentation requirements.
- Drop shipping and supplier shipments. If your supplier ships directly to your customer, the invoicing chain needs care.
These are the cases where assumptions cost money. A short consultation before you open a second location, use a third-party fulfilment service or add a supplier who ships directly is cheap insurance.
Stage 12: Records and audit readiness
GST law requires you to keep records of your sales, purchases, stock and tax for a prescribed period, and a notice can arrive long after the sale. Ask your accountant for the current retention period. For an online store, the records that matter most are:
- Every tax invoice and credit note, retrievable by number, date and order.
- Invoice number series, including a record of any cancelled numbers.
- Product tax register with HSN codes, rates and effective dates.
- Customer GSTINs captured at checkout for business buyers.
- Payment gateway settlement reports and refund reports.
- Courier remittance statements for cash on delivery.
- Marketplace statements and tax collected at source records.
- Purchase invoices supporting any input tax credit claimed.
- Copies of returns filed and proof of payment.
- E-way bills generated.
Back them up in a second place. A platform outage or an account problem is not an acceptable reason for missing records.
A monthly compliance calendar
The dates for returns below come from the GST portal's guidance for monthly filers, and they can change by notification, so confirm them each month.
| When | Task | Owner |
|---|---|---|
| 1st to 3rd of the month | Export last month's sales, returns and credit notes from your store; export payment gateway, courier and marketplace statements | You or your operations lead |
| 3rd to 6th | Reconcile orders, invoices and credit notes; fix missing credit notes and invoice number gaps | Operations with accountant |
| 6th to 9th | Review product tax rates, HSN codes and any rate changes; prepare the GSTR-1 data | Accountant |
| By the 11th | File GSTR-1 for monthly filers | Accountant |
| 11th to 18th | Reconcile input tax credit and purchases; compute tax payable | Accountant |
| By the 20th | File GSTR-3B and pay the tax for monthly filers | Accountant |
| Quarter-end months | For quarterly filers, GSTR-1 is due on the 13th and GSTR-3B on the 22nd or 24th of the following month; tax is still paid monthly | Accountant |
| Year-end | Reconcile the full year, review annual return requirements and plan for the next year | Accountant with you |
The most common GST compliance mistakes by online sellers
| Mistake | Consequence | Prevention |
|---|---|---|
| Not issuing credit notes for returns | Tax is paid on sales that were reversed; reports overstate sales | Issue a credit note for every return and post-sale reduction |
| Filing GSTR-1 from the platform report without reconciling | Mismatches between books, invoices and returns | Reconcile first, then file |
| Wrong HSN or rate on a product | Wrong tax on every sale of the item | Review at product creation and after rate changes |
| Treating COD refusals as sales | Tax paid on goods that came back | Reverse refused orders with documents |
| Ignoring marketplace tax collected at source | Unreconciled payouts | Reconcile each marketplace statement |
| Using composition scheme while selling inter-state or via marketplaces | Ineligible registration | Check eligibility before every expansion |
| Missing e-way bills on large consignments | Penalties and delays in transit | Check value thresholds for wholesale and transfers |
| Spending collected tax | Interest and late fees | Set aside GST daily in a separate account |
| Late filing of nil returns | Late fees even with no tax due | Put due dates in a shared calendar |
| Not keeping settlement and courier statements | Cannot explain differences in an audit | Save monthly statements with the return |
What good compliance software does
You can run all this on spreadsheets at small volume. As orders grow, the right platform removes the manual steps that cause errors. Look for:
- Automatic invoices with correct splits between CGST and SGST, or IGST, based on the delivery state.
- HSN codes and rates stored on each product and printed on invoices.
- Credit notes generated for returns and cancellations, linked to the original invoice.
- Customer GSTIN capture at checkout, with validation.
- Reports by invoice and by HSN for any month, exportable for your accountant.
- Separate numbering series for online and offline sales.
- An audit trail showing who changed what, and when.
- Support for e-invoicing if your turnover requires it.
Ask any vendor to demonstrate each point with a sample month of orders, including returns, and have your accountant review the output.
How ShopMate supports GST compliance, and where you remain responsible
ShopMate includes GST invoicing in its single plan, and the product generates a customer invoice for each order with CGST and SGST, or IGST, shown by item, and lets customers request a GST invoice at checkout by entering a business name and GSTIN (ShopMate). The admin panel includes a GST report that merchants can export for their accountant, in CSV and PDF, with an invoice-wise detail section and an HSN-wise summary section. The report is a reporting aid: returns are filed on the GST portal by you or your accountant, and the report should be reconciled with your books before you file.
It is important to be clear about the division of responsibility. ShopMate's terms state that the merchant is responsible for their own GST compliance in respect of their storefront sales, including issuing valid GST invoices where the law requires (ShopMate Terms and Conditions). Ask the team during your demo to show you how invoices, returns and reports work for a sample month, including how credit notes for returns are documented and how invoice numbers are formed, and have your accountant review the output before you rely on it. Pricing is a flat 5% commission plus 18% GST on every order, with no setup fee and no yearly maintenance charge (ShopMate pricing).
A GST compliance checklist for your store
- I know whether I must be registered and in which states, and my registration details are current.
- I have confirmed with my accountant that the composition scheme is not in use if I sell inter-state or through marketplaces.
- Every product has a reviewed HSN code and GST rate, with the effective date recorded.
- Every dispatched order has one tax invoice, and every return has a credit note.
- Invoice numbers are unique for the year, consecutive and at most sixteen characters.
- I reconcile orders, invoices, credit notes, settlements, COD remittances and marketplace statements every month.
- I file GSTR-1 and GSTR-3B by their due dates, even when there is no tax to pay.
- I pay the tax due and keep GST collected separate from working capital.
- I verify input tax credit with my accountant each month.
- I know when an e-way bill is required for my shipments.
- I have asked how warehouses and stock transfers in other states affect my registration.
- I keep records, statements and returns in a second backup.
Frequently asked questions
What GST returns does an online seller have to file?
Most registered online sellers file GSTR-1, the statement of outward supplies, and GSTR-3B, the summary return, monthly or under the quarterly scheme if eligible. Composition taxpayers, marketplace operators and others have different returns. Annual returns may also apply, so confirm with your accountant.
What are the due dates for GSTR-1 and GSTR-3B?
According to the GST portal, monthly filers file GSTR-1 by the 11th and GSTR-3B by the 20th of the following month. Quarterly filers file GSTR-1 by the 13th of the month after the quarter and GSTR-3B by the 22nd or 24th, depending on the state category. Dates can be extended by notification, so check the portal.
Can an online seller use the GST composition scheme?
Generally no if you make inter-state outward supplies of goods or supply through e-commerce operators who collect tax at source, as the GST portal's guidance on opting for composition states. Most online stores that ship across India fall into those categories.
What is the QRMP scheme?
The Quarterly Return Monthly Payment scheme lets taxpayers with aggregate annual turnover up to ₹5 crore file GSTR-1 and GSTR-3B quarterly while paying tax monthly by challan, subject to the conditions on the GST portal. It reduces the number of returns, not the need for monthly bookkeeping.
What is tax collected at source for marketplace sellers?
E-commerce operators collect a small percentage of the net value of taxable supplies made through their platform and report it in GSTR-8. As a seller, you will see your payouts reduced by it and should reconcile it with the marketplace statements. The GST portal describes the total rate as between 0.5% and 1% from the July 2024 tax period; confirm the current rate.
Do I need an e-way bill for online orders?
E-way bills are generally required for consignments above ₹50,000 in value, with exceptions and state rules. Most single consumer orders are below that, but bulk, wholesale and stock transfer shipments may not be, so check with your accountant and the e-way bill portal.
How do I reconcile GST for an online store?
Match orders to invoices, invoices to credit notes, and your sales ledger to the platform report, then match the totals to your GSTR-1 and GSTR-3B. Separately, explain the difference between invoiced sales and money received using gateway, courier and marketplace statements.
Does ShopMate file my GST returns?
No. ShopMate generates invoices and a GST report that you can export for your accountant, but returns are filed on the GST portal by you or your accountant, and you remain responsible for your own GST compliance as ShopMate's terms state.
Sources and further reading
GST law, rules, due dates and rates are amended often. The portal pages below were read on 3 October 2026. Where a point is stated as general guidance without a link, confirm it with a chartered accountant. Sources were last checked on 3 October 2026.
- Goods and Services Tax Network, Form GSTR-1, Form GSTR-3B, QRMP scheme FAQs, GSTR-8 FAQs and Opt for Composition Scheme; official GST portal.
- Central Board of Indirect Taxes and Customs, CGST Rules, 2017, Rule 46 and Rule 53; GST: An Update.
- E-way bill system, official portal.
- ShopMate, home, terms and conditions and pricing pages, for ShopMate features, responsibilities and pricing.
Disclaimer: This article is for general information only and is not legal, tax or financial advice. ShopMate is the publisher of this guide and has a commercial interest in the platform it describes. The reconciliation example uses assumed figures and a single assumed rate for illustration only. GST law, rules, rates, thresholds, due dates and notifications change, and your situation may differ. Consult a qualified chartered accountant or legal professional before making decisions.
Make month-end GST simpler
Good compliance starts with good data. ShopMate gives you automatic GST invoices, GSTIN capture at checkout and an exportable GST report for your accountant, together with Razorpay payments, 40+ shipping partners and an offline POS, for a flat 5% commission plus 18% GST with no setup fee. Book a free demo to walk through a sample month with our team, review the pricing details, or read more about ShopMate.