You’ve had a good year selling on Amazon or Flipkart. Orders kept coming, payouts kept landing, and then tax season shows up with a pile of words you’d rather not deal with: commission, GST, TDS, TCS. And the first question is usually, “So how much of this is actually my income?”
Here’s the thing a lot of sellers get wrong. The money that hits your bank account is not your income. Let’s sort out ITR filing for Amazon and Flipkart sellers in plain language.
How Is Business Income Calculated for Amazon and Flipkart Sellers?
If you sell on a marketplace as a business, that money is generally treated as business income. So for ITR filing for Amazon and Flipkart sellers, you work out your real profit, not the payout figure.
Say customers pay you ₹8 lakh in a year. After returns, marketplace charges, product costs, and other eligible expenses, your taxable profit could be much lower. Your working usually covers:
- Total sales from marketplace orders
- Returns, cancellations and refunds
- Cost of goods sold and inventory changes
- Commission and service charges
- Shipping, packaging and fulfilment costs
- Ads and promotions
- Other eligible business expenses
Keep your invoices, purchase records, settlement reports and receipts safe. They’re your backup if questions come up later.
Can Sellers Claim Marketplace Fees as Expenses?
Mostly, yes. If you calculate business income the regular way, eligible marketplace costs can bring your taxable profit down. The common ones are:
- Commission paid to the platform
- Shipping charges
- Fulfilment fees
- Advertising costs
- Payment charges
Keep the invoices and monthly fee statements as proof. And if you’re already getting GST back as input tax credit, don’t claim it again as an income-tax expense.
GST Rules for Amazon and Flipkart Sellers
Once you’re registered under GST, you have to follow the rules on invoicing, paying tax, and filing returns. The registration threshold depends on your state and on what you sell. Some small sellers of goods don’t have to register when they sell through an e-commerce operator, but only if they meet every one of these conditions:
- They stay within the applicable threshold
- They make no inter-State supplies
- They sell through the operator in just one State or Union Territory
- They complete the PAN-based enrolment before they start making supplies
If you are registered, make sure you report your taxable sales correctly and keep records of the GST you collect and pay.
What Is GST TCS on Marketplace Sales?
Under Section 52 of the CGST Act, e-commerce operators collect Tax Collected at Source (TCS) on certain supplies. The total rate has been 0.5% since July 10, 2024:
- 0.25% CGST and 0.25% SGST/UTGST for intra-State supplies
- 0.5% IGST for inter-State supplies
It’s credited to your electronic cash ledger once the process is done. Don’t confuse it with income-tax TDS. They’re separate, and GST TCS doesn’t replace your own GST payments.
Understanding TDS Under Section 194-O
Amazon and Flipkart may deduct TDS under Section 194-O of the Income-tax Act, 1961. The rate has been 0.1% since October 1, 2024.
Individual and HUF sellers are exempt if their gross sales through the operator stay at ₹5 lakh or below in the financial year, as long as they’ve given the operator their PAN or Aadhaar.
TDS is usually worked out on the gross sales amount, and it isn’t your final tax. Before you claim the credit, match it with Form 26AS, AIS, and the TDS certificate.
Which ITR Form Should Sellers Use?
| Seller category | Commonly applicable form |
| Individual proprietor using regular accounts | ITR-3 |
| Eligible individual or HUF using presumptive taxation | ITR-4 |
| Partnership firm or LLP | ITR-5 |
| Company | ITR-6 |
ITR-4 is only for those who qualify, so check the latest form instructions first. Presumptive taxation under Section 44AD is an option for some small businesses, but check eligibility, turnover limits,s and payment conditions. Under that scheme, you generally can’t deduct marketplace fees again.
Also, income earned in FY 2025–26 is reported for AY 2026–27 under the Income-tax Act, 1961. Income from April 1, 2026 onwards falls under the Income-tax Act, 2025 (Tax Year 2026–27).
Documents You Need Before Filing
Before you sit down to file, pull together everything below. It saves a lot of back and forth later.
- Your Amazon and Flipkart sales reports
- Settlement and payment statements
- Invoices for commission, shipping, and advertising
- Purchase bills and inventory records
- GST returns and input tax credit records, if you have them
- TDS certificates and Form 26AS
- Your Annual Information Statement (AIS)
- Bank statements and any other expense records
Lay them out next to each other. If your sales, settlements, and deductions don’t line up, you’ll spot it quickly, and it’s much easier to fix now than after you’ve filed.
Common ITR Filing Mistakes to Avoid
These are the slip-ups that trip up a lot of sellers:
- Reporting only the net payout instead of matching it against your total sales
- Forgetting about returns, refunds, and cancellations
- Missing marketplace expenses you’re allowed to claim
- Mixing up GST, TCS, and income-tax TDS
- Claiming TDS without checking Form 26AS and AIS first
- Picking an ITR form without checking that you’re eligible for it
- Brushing aside the GST registration conditions
Final Thoughts
When it comes down to it, ITR filing for Amazon and Flipkart sellers is mostly about keeping tidy records. Match your marketplace statements with your books, choose the right form, and report what you actually earned from the business. Get those three things right, and tax season stops feeling like such a headache.
FAQs
- Do Amazon and Flipkart sellers need to file ITR?
When the income-tax rules require it. That depends on your income, your business structure, and a few other conditions. - Is the marketplace payout taxable income?
Not necessarily. Your business income is worked out after sales, returns, eligible expenses and other adjustments. - Can I claim marketplace commission as a business expense?
Yes. Eligible commission and service charges can generally be claimed under the regular method. - What is the TDS rate under Section 194-O?
It’s 0.1% since October 1, 2024, with an exemption for eligible individual and HUF sellers. - What is GST TCS?
It’s tax collected by the e-commerce operator under Section 52 of the CGST Act, generally 0.5% in total.
