Goods and Services Tax (GST) is a tax system implemented by the government of many countries, including India, to simplify the tax system and make it more efficient. GST is a destination-based consumption tax that is levied on value-added goods and services at each stage of production or distribution. In India, GST is levied at multiple rates, including 5%, 12%, 18%, and 28%.
In Amazon Business, GST is applicable to all the products and services available on the platform. As a business user, you need to have a GSTIN number. When you're making a purchase on Amazon Business, GST will be included in the final price of the product. This will be visible during the checkout process. With GST, the prices of goods and services are expected to become more transparent and predictable for businesses. This should make it easier for them to manage their tax obligations.
Did you know? Around 40 lakh Indian businesses sell their goods on Amazon.
What is GST?
GST stands for goods and services tax. It is a newly introduced indirect tax regime launched in India in 2017. The main aim was to replace existing tax systems like VAT, Service tax, Excise, etc. GST was introduced on the principle of "one nation, one tax". Earlier there were different types of taxes for different stages of manufacturing, sales and purchase. This multiplicity of taxes has caused numerous problems and led to cascading taxes.
The Objectives of GST
GST is a destination-based tax system. The ultimate burden of tax is born by the consumer.
The main objectives of GST are
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To digitize the entire process and make it easy for taxpayers to file returns and pay taxes.
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Apply GST only on the value addition and not on the tax amount. In the previous tax regime due to different types of taxes, it was not easy to segregate value addition from taxes and that led to double taxation.
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GST has increased the tax base in the past years.
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Special coverage for e-commerce websites. Earlier e-commerce websites like Amazon, Flipkart etc were outside the purview of indirect tax.
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To control tax evasion by introducing a robust system.
Also Read: Amazon Affiliate Program: How to Become an Amazon Associate to Boost Income
Requirement of GST Registration
In order to register for GST, a business typically needs to meet certain requirements. These requirements vary depending on the country and jurisdiction, but some common ones include:
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Business Structure: GST registration is typically required for businesses that are organized as sole proprietorships, partnerships, limited liability companies, or corporations.
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Annual Revenue: In many countries, GST registration is mandatory if a business exceeds a certain annual revenue threshold.
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Nature of Business: GST registration is typically required for businesses that engage in the sale of goods or services or both.
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Location: GST registration is typically required for businesses that operate within a specific geographic area.
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Tax compliance: Businesses must be compliant with tax laws and regulations, including filing regular GST returns.
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GSTIN Number: Businesses must have a GSTIN number (Goods and Services Tax Identification Number) to register for GST.
It is worth noting that the rules and regulations for GST registration may vary depending on the country, so it is best to check with the relevant government agency or a tax professional to ensure that all the requirements are met.
A Brief About Amazon India
Amazon India was established in 1994 by Accelerator Enterprise Pvt. Ltd. which is the subsidiary company of Amzon.com. It is a kind of online supermarket where you can get items from various categories. One can shop for electronics, home furniture, home decor items, beauty, personal effects items, stationery supplies and much more stuff from different categories.
Advantages of Amazon Marketplace for Sellers
One can easily buy things without leaving the comfort of their home. It has not only made shopping convenient for consumers but also provided a platform for small Indian sellers. Amazon has digitised around 40 lakh businesses and is planning to increase it to 60 lakhs.
Check out some more benefits from the points below.
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Strong and wide logistic network. The sellers can easily take advantage of Amazon's wide distribution channel.
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It provides wide exposure for sellers. They can sell their products from any part of the country to buyers situated in different states.
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There is no need to establish a physical shop. One can start a business from his home or a small basement.
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Amazon is an established brand, and selling on it automatically provides creditability to the first-time seller.
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All sales and purchase records will be available.
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Low marketing and advertising costs. Sellers need not spend money marketing their products. Amazon has low advertising charges that are deductible from the margin on the sale of goods. Thus the seller is not required to bear any initial costs.
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A proper Amazon GST invoice is issued.
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The GST invoice is available, so in the case of business-to-business transactions, one can take advantage of the input tax credit.
Also Read: GST on Medicines and Pharmaceutical – Rates & Exemptions
Why is GST Required for Amazon Businesses?
As per GST provisions, a person is required to obtain GST registration only when the total turnover exceeds the threshold limit set by the law. But to sell on Amazon the seller is required to get GST registration before creating an Amazon seller account. Under the exception rule, if a person makes interstate sales, they must register under GST regardless of their turnover amount. On Amazon, sellers can sell goods worldwide and thus they need to get GST registration before setting up an Amazon seller account.
Although buyers are not required to mention a GST number in their account, adding a GST number to their Amazon account will help them in their B2B transactions. By adding the GST number to Amazon buyers will be able to buy goods with GST invoices. This will enable them to fill in GST returns and available input tax credits.
Register GST Number on the Amazon Business
In order to register for GST on Amazon Business, you will need to follow a few simple steps:
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Log in to your Amazon Business account.
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Go to the "Account Info" section and select "Manage GST Information."
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Enter your GSTIN (Goods and Services Tax Identification Number) and other required information, such as your PAN (Permanent Account Number) and your business address.
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Upload any supporting documents that may be required, such as a copy of your GST registration certificate.
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Review and submit the information.
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Wait for Amazon to verify your GST registration. This process can take a few days, during which time your account may be temporarily suspended.
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Once your GST registration is verified, you will receive an email confirmation from Amazon.
It is important to note that GST registration is mandatory for businesses that sell on Amazon business in India and the registration process must be done by the seller. Amazon doesn't provide a GST registration service. Also, Amazon may periodically ask for GSTIN to be updated or verified to ensure compliance with the GST laws.
Also Read: Effect of GST on the Indian Economy
How to Add, Edit or Delete the GST Number to Amazon?
Amendments or changes to the GST details provided earlier in the Amazon business account can be made by following the steps:
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Go to the business setting page.
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Select the option “manage GST”
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Under Manage GST, all the details of the registered GST number and address will be available.
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The administrator has the right to add a GST number to Amazon or address, delete an existing GST number or amend existing information.
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Only the administrator has editing rights. All other members can view the details and don't have an editing facility.
Amazon GST Invoice for Business-to-Business Purchase Transactions
By adding GST to the Amazon customer account, businesses gain multiple benefits:
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They can save on their purchase by availing of input tax credits of up to 28% on purchases made for office equipment, office supplies etc.
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Get a discount on bulk purchases.
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It saves time, money and effort.
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Option to choose from various sellers at competitive prices.
Conclusion
Moreover, you need to observe a few points to claim GST on Amazon. This can be done by using a GST invoice filter. One can easily find goods with GST-compliant invoices. Also, you can check whether the price mentioned is inclusive of GST or excluding GST. On the product page, look for the GST invoice badge. GST credit is allowed only on GST-compliant products. There are a few products that do not provide GST credit.
It was all about Goods and Services Tax for Amazon's business.
Although the process of obtaining GST might seem unnecessary at first, registering as an Amazon seller is mandatory. This is because it is beneficial for the customer in regards to saving the bill amount.
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