If you sell on Amazon or Meesho, or you're a freelancer billing clients in dollars, you already know GST filing doesn't feel like the same thing your neighbourhood kirana shop owner deals with. Your problems are different, and honestly, most CAs still explain GST like you're running a regular offline shop in Johari Bazaar.
I've sat across the table with e-commerce sellers from Sanganer who couldn't figure out why their GSTR-3B liability didn't match the bank credit from Amazon. I've had a freelance developer in Malviya Nagar almost pay 18% GST on a US client's invoice because nobody told him about LUT. And I've seen a Meesho reseller in Bikaner get a notice simply because her GSTR-1 sales figure and her Meesho payout report were pulling from two different numbers.
None of this is because these people are careless. It's because e-commerce GST and export-of-services GST run on a slightly different rulebook, and nobody hands you that rulebook when you sign up on Amazon Seller Central or start invoicing on Upwork.
This article covers both worlds: online sellers dealing with TCS and marketplace reconciliation, and freelancers/remote workers dealing with export of services, LUT, and foreign remittance proof. Here's how the mechanics actually work, not just the definitions.
GST Rules & Filing Guide for E-Commerce Sellers (Amazon, Flipkart, Meesho)
Selling through a marketplace changes your GST compliance in one big way: the platform itself deducts tax before it pays you. That's TCS, and if you don't understand it, your books will never tally with your bank statement.
What is TCS (Tax Collected at Source) Under GST, in Plain Language
Under Section 52 of the CGST Act, every e-commerce operator (Amazon, Flipkart, Meesho, Myntra, and so on) has to deduct a small percentage of tax before releasing your payment. As of 2026, this rate is 0.5% of net taxable supplies. That's 0.25% CGST + 0.25% SGST for intra-state sales, or 0.5% IGST for inter-state sales. Note that this was cut down from the earlier 1% rate back in July 2024, so if your CA or accounting software is still using 1%, that's outdated, and it'll throw your numbers off.
Here's how it actually plays out. Say you sold goods worth ₹1,00,000 (net, after returns) on Amazon this month.
Amazon deducts ₹500 as TCS
Amazon pays you ₹99,500
Amazon deposits that ₹500 with the government under your GSTIN
Amazon files GSTR-8 by the 10th of the next month, reporting this
The TCS shows up in your GSTR-2A/2B as a credit sitting in your Electronic Cash Ledger
This ₹500 isn't lost money. It's an advance tax credit you can use to pay off your actual GST liability when you file GSTR-3B. Most sellers who complain about "cash flow being stuck" simply haven't claimed this credit properly. How to Claim TCS Credit walks through the exact steps if you want the full breakdown.
Important: TCS is calculated on the net value, meaning after deducting returns and cancellations. If a customer returns a product, that sale shouldn't be counted twice. Once in your gross sales, and once in the operator's TCS working. This is exactly where most reconciliation errors start.
How to Pull Sales Reports from Merchant Portals and Match with GSTR-1
This is the step sellers skip, and it's the step that saves you from a notice six months later.
Your GSTR-1 needs to show your gross sales, matched properly against returns. Your marketplace settlement report shows net payouts after commission, TCS, and returns. These two numbers are not the same thing, and if you file GSTR-1 by just copying the "amount credited to bank" figure, you're already setting yourself up for a mismatch.
Here's the practical way to do it every month:
Download your MTR (Merchant Tax Report) from Amazon Seller Central, or the equivalent GST/Tax report from Flipkart Seller Hub or Meesho Supplier Panel.
Separate gross sales, returns/cancellations, and commission/TCS deductions into three columns. Don't net them off in your head. Do it in a sheet.
Cross-check the TCS figure shown in your GSTR-2A against what the platform's report says was deducted. These should match to the rupee.
File GSTR-1 with gross sale value, state-wise, since marketplace sales are often inter-state and need to be reported under the correct place-of-supply.
Keep this reconciliation sheet saved every month. When a notice does come (and for high-volume sellers, it sometimes does, just as routine scrutiny), you want to hand over a clean month-by-month file, not scramble through a year of Amazon reports.
A Jodhpur-based Flipkart seller I worked with was skipping step 3 entirely. Her GSTR-3B showed a TCS credit that never matched the actual GSTR-2A entry because Flipkart had flagged a few of her SKUs under a different GSTIN by mistake. Took us two months of back-and-forth with Flipkart support to fix. Reconciling monthly instead of quarterly would have caught this in week one.
Filing GSTR-1 and GSTR-3B Step-by-Step for Online Sellers
GSTR-1 (Outward Supplies), due by the 11th of the following month:
Report B2C sales under the relevant HSN summary and place-of-supply
If you're registered under Section 9(5)-covered categories (like food delivery aggregators handling tax on your behalf), those sales are reported separately; don't double-report them
Match every invoice-level figure against your marketplace's tax report before submission
GSTR-3B (Summary Return with Tax Payment), due by the 20th of the following month:
Auto-populated liability comes from your GSTR-1 and GSTR-2B
Offset your output tax liability using ITC first, then use your TCS credit sitting in the Electronic Cash Ledger for any balance
Double-check the TCS credit reflects correctly. If it's missing, it usually means the operator hasn't filed GSTR-8 yet, or there's a GSTIN mismatch on their end
If your business is registered across multiple states because you use Amazon's fulfilment centres in different states (this counts as a place of business for GST purposes), each state GSTIN needs its own GSTR-1 and GSTR-3B. Sellers using FBA and similar warehousing models often miss this and think one GSTIN covers everything. It doesn't.
GST Rules for Freelancers and Remote Workers (Export of Services)
If you're an IT freelancer, designer, consultant, or remote worker billing clients outside India, your GST situation is actually simpler in some ways and trickier in others. Simpler because you often pay zero GST. Trickier because getting there requires paperwork most freelancers never bother with until a client asks for a GST invoice.
When is GST Registration Mandatory for Freelancers?
For service providers, the GST Registration threshold is ₹20 lakh in a financial year (₹10 lakh if you're based in a special category state like Manipur, Mizoram, Nagaland, or Tripura). This is different from the ₹40 lakh threshold that applies to goods sellers - freelancers offering services don't get that higher limit at all.
A few situations that catch freelancers off guard:
Mixed clients: If you earn ₹12 lakh from Indian clients and ₹6 lakh from a US client, your aggregate turnover is ₹18 lakh. Below threshold, technically. But if you want to export zero-rated and file LUT, registering voluntarily is the only way in.
Reverse Charge Mechanism (RCM): If you're paying for foreign SaaS tools like AWS, Adobe, Figma, or Zoom that don't charge Indian GST, RCM registration can become mandatory regardless of your turnover.
Inter-state supply: Technically, any inter-state taxable supply of services can trigger mandatory registration, though for pure export-only freelancers this gets interpreted alongside the export provisions.
Bottom line: don't wait for a notice to figure this out. If foreign clients are a meaningful chunk of your income, register early and file LUT before you need it. GST for Freelancers covers the registration process end-to-end if you want the walkthrough.
What is Export of Services and Zero-Rated Supply?
Under Section 2(6) of the IGST Act, your work counts as "export of services" when:
You (the supplier) are located in India
Your client (the recipient) is located outside India
The place of supply is outside India
Payment is received in foreign currency (or in Indian rupees, where RBI permits)
You and your client are not merely different branches of the same legal entity
If all five conditions hold, your service is a zero-rated supply under Section 16 of the IGST Act. This is different from an "exempt" supply. With zero-rated supply, you charge 0% GST on the invoice, but you still get to claim Input Tax Credit on your business expenses (laptop, software subscriptions, coworking rent, whatever GST you paid on inputs). With an exempt supply, you'd lose that ITC entirely. Zero-rated is the better deal, and it's the correct classification for genuine export of services.
How to File LUT (Letter of Undertaking) Online to Avoid Paying 18% GST Upfront
Without an LUT, you'd technically have to charge and pay 18% IGST on your export invoice upfront, then apply for a refund later through Form RFD-01. That's a painful cash flow hit for a freelancer who's already dealing with delayed international payments. LUT in GST is what lets you skip that entirely and invoice at zero GST from day one.
Here's the process on the GST portal:
Log in to gst.gov.in with your GSTIN credentials
Go to Services > User Services > Furnish Letter of Undertaking (LUT)
Select the financial year you're filing for (LUT validity is one financial year, so you renew every April)
Fill in details of two witnesses: name, address, occupation. Family members, colleagues, anyone reliable works. They don't need a GSTIN
Review the self-declaration the portal generates
Submit using EVC (Aadhaar OTP) if you're a proprietor or individual, or DSC if you're a company/LLP
You get an ARN (Application Reference Number), and approval is usually automatic within 1-2 working days
A few things freelancers consistently get wrong:
Filing late. LUT has to be in place before you raise the export invoice. If you invoice a client on 5th April but file LUT on 10th April, that invoice cannot be treated as zero-rated after the fact. File in the last week of March or first week of April, every single year.
Forgetting to renew. The LUT expires on 31st March. If you don't refile for the new financial year, every export invoice after that date technically needs IGST charged on it until you file again.
The one-year realization rule. If payment against an LUT invoice isn't received within one year of the invoice date, you're required to pay IGST with interest on that invoice. This rarely comes up for freelancers who get paid promptly, but if a client sits on payment for months, keep this deadline in mind.
FIRC/BRC Importance for PayPal, Stripe, Wise, and Bank Remittances
This is the part that trips up remote workers the most, because nobody explains it until there's a problem.
When a foreign payment lands in your account, whether through a direct SWIFT transfer, PayPal, Stripe, or Wise, your bank or payment processor issues a certificate confirming the money came from abroad in foreign currency. This is your FIRC (Foreign Inward Remittance Certificate), sometimes issued as an e-FIRA depending on the bank.
Why this matters:
It's your proof of export, tying a specific invoice to a specific payment received in foreign currency
Without it, you cannot substantiate the zero-rated classification if the department asks
If you ever apply for an ITC refund (in case you accumulate unused credit), FIRC is a mandatory supporting document
It's also what confirms you actually met the "payment in convertible foreign exchange" condition under Section 2(6)
Practical habit: every time you get paid, download or request the FIRC/e-FIRA immediately and save it against that invoice number. Don't wait till year-end to chase your bank for twelve months of certificates. Some banks make this a slow process, and PayPal/Stripe/Wise each have their own portal quirks for pulling these documents.
Top 5 Mistakes That Lead to GST Notices
1. Treating TCS as an expense instead of a receivable. TCS deducted by Amazon or Flipkart is not a cost to you. It's tax paid on your behalf that sits as credit. Sellers who book it as an expense in their accounting software end up overstating costs and understating the ITC/cash credit they're entitled to claim. This creates a mismatch the moment the department cross-checks your books against GSTR-2A.
2. Not reconciling marketplace settlement reports with GSTR-1 monthly. Waiting until year-end (or worse, until GSTR-9 annual return time) to reconcile means small errors compound across twelve months. By the time you catch a mismatched GSTIN or a missed return adjustment, it's a much bigger cleanup job, and a much bigger red flag if the department notices first.
3. Raising export invoices before LUT is actually filed. This is the freelancer version of mistake #2. An invoice dated before your LUT's ARN date cannot legally claim zero-rated treatment. If you're not sure whether your LUT for the current financial year is active, check the portal before raising a single export invoice.
4. Missing FIRC documentation for foreign remittances. No FIRC means no solid proof your service actually qualifies as an export. If a notice asks you to justify why you charged 0% GST on an invoice, "the client paid me on PayPal" without the corresponding certificate isn't going to hold up.
5. Registering in one state but operating fulfilment/warehousing across multiple states. Amazon FBA and similar models mean your goods (and technically, your place of business) can sit in warehouses across several states. Sellers who assume their home-state GSTIN covers everything are often flagged for non-filing in states where the marketplace has stock in their name.
Get Your GST Filing Done Right, Every Month
Reconciliation errors, missed LUT deadlines, and TCS mismatches are the most common reasons e-commerce sellers and freelancers end up dealing with GST notices, and almost all of them are avoidable with a proper monthly process. If you're spending your evenings trying to match Amazon reports against GSTR-2A instead of running your actual business, it's worth handing this over to someone who does it daily.
Our team handles GST Return Filing for e-commerce sellers and freelance exporters across Rajasthan and pan-India, month after month, so nothing slips through. Get in touch and let's set up a compliance process that doesn't eat your time or your peace of mind.
Frequently Asked Questions (FAQs)
1. Do Amazon and Flipkart sellers need GST registration even below ₹40 lakh turnover?
Yes. Goods sellers on e-commerce platforms don't get the benefit of the higher ₹40 lakh threshold. GST registration is compulsory before you can even activate a marketplace listing, regardless of turnover.
2. What's the current TCS rate under GST for e-commerce sellers in 2026?
0.5% of net taxable supplies, split as 0.25% CGST + 0.25% SGST for intra-state sales, or 0.5% IGST for inter-state sales. This has been the rate since July 2024, down from the earlier 1%.
3. Can I claim TCS deducted by Amazon as a refund if I have no GST liability?
Yes. If your TCS credit exceeds your output tax liability for the period, the excess stays in your Electronic Cash Ledger for future use, or you can apply for a refund.
4. Is GST registration compulsory for freelancers earning only from Indian clients under ₹20 lakh?
No. For amounts below ₹20 lakh (₹10 lakh in special category states) with only domestic clients, registration isn't mandatory. It becomes worth considering only if you want to claim ITC on business expenses.
5. Do I need GST registration if all my clients are foreign and I earn below ₹20 lakh?
Not mandatorily, but strongly recommended. Without registration, you can't file LUT or claim zero-rated export benefits, and you lose ITC on your business expenses.
6. What happens if I forget to renew my LUT before the new financial year?
Every export invoice raised after 31st March without a fresh LUT technically requires IGST to be charged and paid, which you'd then have to claim back as a refund. File your renewal in the last week of March to avoid this entirely.
7. Is IEC (Import Export Code) required for freelancers exporting services?
No, IEC isn't required for pure services exports. Your PAN and GST registration are sufficient. IEC becomes relevant only if you plan to export physical goods later.
8. What's the difference between zero-rated and exempt supply under GST?
In zero-rated supply (like export of services under LUT), you charge 0% GST but still retain your right to claim ITC. In exempt supply, you don't charge GST, but you also lose ITC eligibility entirely.
9. How do I match my Meesho/Flipkart settlement report with what I report in GSTR-1?
Pull the platform's tax/MTR report, separate gross sales, returns, and TCS/commission deductions into their own columns, then report gross sales (not net payout) in GSTR-1, matched to the correct place of supply.
10. What documents should I keep as proof for export of services if GST asks for it later?
Your export invoice (marked as zero-rated under LUT with the ARN referenced), the FIRC or e-FIRA for each payment received, your LUT acknowledgment for the relevant financial year, and your client agreement or correspondence establishing the recipient is located outside India.