How to Sell on Amazon Without a GST Number

Selling on Amazon is a popular way for entrepreneurs and businesses to reach a vast audience and boost sales. However, one of the common concerns for new sellers, especially those in India, is whether they need a Goods and Services Tax (GST) number to start selling. The short answer is: Yes, but there are exceptions. In this article, we'll explore how you can sell on Amazon without a GST number, the circumstances under which this is possible, and some tips for managing your business effectively without GST registration.

Understanding GST and Its Importance

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. It has replaced various indirect taxes in India, such as VAT, service tax, excise duty, etc. The primary purpose of GST is to streamline the tax system and prevent the cascading effect of taxes on the final consumer.

For businesses, GST registration is mandatory if their annual turnover exceeds the threshold limit of ₹20 lakhs for service providers and ₹40 lakhs for businesses dealing in goods (as of the latest regulations). Without GST registration, a business cannot legally collect GST from its customers or claim input tax credit on the GST paid on purchases.

Can You Sell on Amazon Without a GST Number?

Yes, you can, but under specific conditions. If your business's turnover is below the threshold limit, or if you fall under certain exempt categories, you may not need to register for GST to sell on Amazon. Here’s how:

1. Turnover Below Threshold Limits: If your annual business turnover is below ₹20 lakhs (for service providers) or ₹40 lakhs (for goods suppliers), you are not required to register for GST. This exemption allows small businesses and startups to operate without the burden of GST compliance.

2. Selling GST-Exempt Goods: If you are dealing exclusively in products that are exempt from GST, you do not need a GST number to sell those products on Amazon. Common GST-exempt goods include unprocessed agricultural products, books, and certain handicrafts.

3. Casual Taxable Person: If you plan to sell on Amazon only for a short duration or on a casual basis (for example, during a particular season), you can register as a casual taxable person without a permanent GST number. This registration is temporary and valid for 90 days, with the option to extend once.

How to List Products Without a GST Number

To list your products on Amazon without a GST number, you need to follow these steps:

1. Create an Amazon Seller Account: Start by signing up for an Amazon Seller account. During the registration process, Amazon will ask for your GST details. Here, you can select the option that you do not have a GST number.

2. Product Category Selection: Ensure that your products fall under the categories that do not require GST registration. Amazon's system will allow you to list products in GST-exempt categories without requiring a GST number.

3. Provide Necessary Documents: You may need to provide additional documents to prove that your business turnover is below the threshold or that you are selling exempt goods. These documents might include your PAN card, business address proof, and a declaration of your business's turnover.

4. Marketplace Facilitator: In some cases, Amazon acts as a marketplace facilitator and handles the tax collection on your behalf. This setup can vary based on your location and the product categories.

Limitations of Selling Without a GST Number

While selling without a GST number is possible, there are several limitations you should be aware of:

1. Restricted Product Categories: Not all product categories are eligible for listing without a GST number. You may be limited to selling only those products that are GST-exempt or fall below the threshold.

2. No Input Tax Credit: Without a GST number, you cannot claim input tax credit on the GST paid on your business purchases. This could increase your costs and reduce profitability, especially if your business scales up.

3. Compliance and Scalability: As your business grows, you may exceed the turnover threshold, making GST registration mandatory. At this point, you'll need to transition to GST compliance, which may require restructuring your business operations and pricing strategy.

4. Perception of Professionalism: Some customers and business partners may view GST registration as a sign of a legitimate and professional business. Operating without GST could affect your reputation and customer trust, especially in B2B transactions.

Alternatives to GST Registration

If you are hesitant to register for GST, consider these alternatives:

1. Register Under the Composition Scheme: If your turnover is below ₹1.5 crore, you can opt for the GST Composition Scheme, which allows you to pay GST at a lower rate on your turnover. This scheme simplifies GST compliance and reduces the administrative burden.

2. Use Fulfillment by Amazon (FBA): With FBA, Amazon takes care of the storage, packing, and shipping of your products. In some cases, Amazon may also handle tax collection and remittance on your behalf, reducing the need for you to manage GST directly.

3. Sell Through a GST-Registered Partner: If you do not wish to register for GST, you can partner with a GST-registered seller or distributor who can list your products on Amazon under their GST number. This approach allows you to avoid GST registration while still reaching Amazon's vast customer base.

Conclusion

Selling on Amazon without a GST number is possible, but it comes with certain limitations and considerations. If your business turnover is below the threshold limit or if you sell GST-exempt goods, you can list your products on Amazon without GST registration. However, as your business grows, GST registration may become necessary, and it’s important to be prepared for that transition.

In the meantime, focus on building a strong product lineup, optimizing your listings, and providing excellent customer service. By doing so, you can grow your business on Amazon even without a GST number, and be ready to scale up when the time comes.