Can I Sell on Amazon Without a GST Number?

Selling on Amazon can be a lucrative opportunity, but there are certain legal requirements and regulations that need to be followed. One of the most common questions from sellers, especially those in India, is whether they can sell on Amazon without a GST (Goods and Services Tax) number. This article aims to provide a detailed answer to this question, discussing the various scenarios and implications for sellers without a GST number.

Understanding GST and Its Importance

Before diving into whether you can sell on Amazon without a GST number, it’s essential to understand what GST is and why it matters. GST is a comprehensive indirect tax that has replaced several indirect taxes in India. It’s levied on the supply of goods and services and is applicable throughout India, with a few exceptions.

For businesses, including those selling on Amazon, GST is crucial because it:

1. Simplifies Taxation: GST merges various indirect taxes into a single tax, making compliance easier.
2. Enhances Transparency: It provides a clear structure for taxation, reducing the chances of tax evasion.
3. Improves Supply Chain Efficiency: Since GST is applied at each stage of production, it reduces the cascading effect of taxes.

Selling on Amazon Without a GST Number

The short answer is Yes, you can sell on Amazon without a GST number under certain conditions. However, the ability to sell without a GST number is limited and comes with certain caveats:

1. Selling as an Individual or Unregistered Seller: If you are selling as an individual or as a small business with an annual turnover below the GST threshold (which is ₹20 lakhs for services and ₹40 lakhs for goods), you are not required to register for GST. In this case, you can still sell on Amazon without a GST number. However, Amazon will require you to submit a declaration confirming that your turnover is below the threshold limit.

2. Categories Exempt from GST: Certain product categories are exempt from GST. If you are selling products in these categories, you may not need a GST number. However, it's crucial to verify if your product falls under this exemption to avoid any legal issues.

3. Composition Scheme: If you are a small business and your turnover is below ₹1.5 crores, you can opt for the GST Composition Scheme. Under this scheme, you pay a lower tax rate on your turnover and are not required to maintain detailed records or issue a tax invoice. However, under this scheme, you cannot collect GST from your customers, which might limit your ability to claim input tax credits.

Implications of Selling Without a GST Number

While it’s possible to sell on Amazon without a GST number under the conditions mentioned above, there are several implications and potential limitations you should be aware of:

1. Input Tax Credit: If you are not registered under GST, you cannot claim input tax credit on your purchases. This can increase your overall cost, as you will not be able to deduct the GST paid on your business expenses.

2. Limited Categories: Selling without a GST number might limit the categories you can sell in, as many categories on Amazon require a GST number to list products.

3. Growth Limitation: If your business grows and your turnover crosses the GST threshold, you will need to register for GST to continue selling on Amazon. This might require changes in your business operations and accounting practices.

4. Legal and Compliance Risks: If you do not register for GST when required, you could face legal and compliance risks, including penalties and fines. Amazon is strict about compliance and may suspend your seller account if you fail to adhere to tax regulations.

Steps to Register for GST

If you decide to register for GST to expand your business opportunities on Amazon, the process is relatively straightforward:

1. Obtain a PAN (Permanent Account Number): This is the first step in registering for GST. You need to have a PAN card for your business.

2. Fill out the GST Registration Form: You can do this online on the GST portal. You will need to provide details such as your business name, PAN, location, and bank account information.

3. Submit Required Documents: These include your PAN card, proof of business registration, identity proof, address proof, and bank statement.

4. Verification and Approval: After submitting the application, the GST department will verify the information. Once approved, you will receive your GSTIN (GST Identification Number).

5. Compliance: Once you have your GSTIN, you need to file regular GST returns and comply with all GST regulations.

Conclusion

In summary, selling on Amazon without a GST number is possible if your business meets certain criteria, such as having a turnover below the GST threshold or selling exempt products. However, as your business grows, obtaining a GST number becomes necessary to expand your operations and avoid legal issues. Understanding the implications of selling without a GST number can help you make an informed decision and ensure that your business remains compliant with tax laws.

If you’re serious about building a successful online business on Amazon, registering for GST is a prudent step. It not only opens up more opportunities for selling but also ensures that you can take full advantage of input tax credits and avoid any potential legal complications in the future.