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This article applies to selling in: India

Tax policies

Purpose

This document describes the methodology adopted by the system to calculate Indian Goods and Services tax (GST). It comprises of Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST), and Integrated Goods and Services Tax (IGST) for sellers or merchants using tax calculation services.

Overview

GST is a unified tax levied on both goods and services. In the GST regime, both the central and the state governments will impose GST on the same transaction involving supply of goods or services or both. Each taxable transaction could either attract CGST and SGST/UTGST or IGST. CGST and SGST/UTGST will be levied where location of seller and place of supply of goods or services or both are within the state or Union Territory (UT) (intra-state supply). IGST will be levied where location of seller and place of supply of goods or services or both are in two different states or UT and on import (inter-state supply).

Unlike in the erstwhile indirect tax regime, where VAT or CST is applicable on buying and selling of goods and service tax is applicable on provision of service, GST would be applicable on supply of goods and services. The definition of supply is wide and inter alia includes:

  1. All forms of supply such as, sale, transfer, barter, and lease, made for a consideration in the course or furtherance of business.
  2. Import of services, for a consideration, whether or not in the course or furtherance of business.
  3. Import of services from related persons or branch office located outside India, even if without consideration, but in the course or furtherance of business.

GST is a consumption based tax. Therefore, GST of the state or UT where the goods and services are actually consumed, will apply. While SGST needs to be paid state-wise, CGST and IGST have to be paid on a consolidated basis. However, the place of supply, the location where the goods and services are actually consumed, have to be disclosed.

In order to determine whether a supply is an inter-state supply attracting IGST or intra-state supply attracting CGST and SGST/UTGST, specific place of supply rules are formulated:

Supply of goods

Generally, for supply of goods, if the state or UT from where goods originate and the state or UT where they are delivered is same, then it qualifies as intra-state supply and is subject to CGST and SGST.

If the state or UT from where the goods originate and the state or UT where they are delivered are different, it should qualify as inter-state supply and is subject to IGST.

Import of goods into India will be subject to Basic Customs Duty (BCD) in addition to IGST. At the same time, export of goods outside India will be tax-free.

Supply of service

There are two types of supply services:

  1. Local supply of service: Generally, in case of a B2C transaction, the place of supply shall be the address of the recipient on records of the seller or location of seller in other cases. The place of supply is subject to certain exceptions such as services in relation to immovable property and event-based services.

    In case of a B2B transaction, the place of supply shall be the bill to address which is the registered place of business of the recipient on records of the seller. The bill to address should have GSTIN.

  2. Import and export of service: On import of services into India by a person registered under GST, where service provider is located outside India, the service recipient will be liable to pay GST under the reverse charge mechanism. On the other hand, if the services qualify as export, the same will be subject to GST at zero rate.

    Additionally, the service recipient may also be liable to pay GST under the reverse charge mechanism on certain specified services even if the provider of service is located in India typically, referred as domestic reverse charge.

    If the sellers located outside India are providing Online Information and Database Access and Retrieval (OIDAR) service to either government, individual or any unregistered person in India, for other than business purpose, through Amazon.in, then the overseas OIDAR service providers will be required to obtain GST registration in India and discharge the GST liability.

Rate of GST

Goods

Goods are typically categorised under seven bands of tax rates which includes exempt, 0.25 percent, 3 percent, 5 percent, 12 percent, 18 percent, and 28 percent depending on the Harmonised System of Nomenclature (HSN) classification of the goods. Additionally, certain category of de-merit and luxury goods such as pan masala, aerated waters, and luxury cars attract cess which is calculated at specified rates, in addition to the applicable GST.

The seller will have to assign appropriate HSN classification of the goods while listing their product for sale along with the applicable Product Tax Code (PTC).

Service

There are five standard rates prescribed for supply of service which includes exempt, 5 percent, 12 percent, 18 percent, and 28 percent. Further, in addition to GST, cess may also be levied on certain notified services. At present, there are no services which have been notified on which cess will apply.

The seller will have to assign appropriate SAC classification of the services while listing their offerings along with the applicable PTC.

Tax calculation service

This tax calculation service provides functionality for calculating GST for goods shipped by sellers from place of business located in India, goods sold by offshore sellers and services provided on Amazon.in, based on the parameters discussed above.

This document describes the support for calculating the applicable GST and related functions:

  • Determine the tax jurisdiction and tax type
  • Determine the tax calculation selling price
  • Time of supply and GST calculation
  • Return of goods and services

Determine tax jurisdiction and tax type for goods

This requires information on transaction-related parameters to determine tax jurisdiction and tax type such as, CGST and SGST/UTGST or IGST. These transaction-related information are:
  • Bill-from location
  • Bill-to location
  • Ship-from location
  • Ship-to location
  • Place of supply
  • Place of delivery

General note applicable to the tax location and tax type

GST being a consumption-based tax, the GST rates of the state or UT where the goods are actually consumed should apply. In case of B2C transactions, the place of supply will always be ship-to location and bill-to location will have no relevance. The levy of GST would depend on the ship-from and ship-to location only. Thus, even if the buyer and seller ship-from location are in the same state or UT, a supply could be an inter-state supply if the movement of goods takes place from one state or UT to another. Similarly, even if buyer and the seller ship-from location are in different state or UT, a supply could be an intra-state supply if the delivery location of goods is within the state or UT.

In case of B2B transactions, the bill-to location having GSTIN and the ship-to location could be different. In such case, in order to determine the place of supply, it will be assumed that the goods have been delivered to the bill-to location. Therefore, the levy of GST would depend on the bill-from and bill-to location. Thus, even if the movement of goods takes place from one state or UT to another, a supply could be an intra-state supply if the buyer and the fulfilment centre are in same state or UT. Similarly, even if the movement of goods is within same state or UT, the supply could be inter-state supply if the buyer and the fulfilment centre are in different state or UT.

To support eligible sellers to comply with e-invoicing compliance, Amazon has enabled a feature in Seller Central through which you can opt for generating e-invoices and authorise Amazon to generate e-invoices on your behalf for all marketplace transactions. For all non-marketplace transactions, you must store IRP credentials in your account in an encrypted form.

E-way bill generation is mandatory for transportation of goods valued above INR 50,000. For e-way bill applicable transactions, Amazon will generate e-way bill as a transporter.

Bill-from location

The bill-from location is the place of business of the registered seller.

Ship-from location

The ship-from location is the location from where the shipment originates that is the location from where the goods are actually shipped to the customers.

If the goods are delivered from a place outside India, it will be regarded as import of goods into India.

  1. Products shipped using Fulfilment by Amazon: The tax calculation services use the location of an fulfilment centre which is an additional place of business of the seller under respective state GST registration as bill-from and ship-from location for shipments originating from a fulfilment centre.
  2. Seller-fulfilled products: Tax calculation services are provided for seller-fulfilled shipments based on the ship from state as declared by the seller in their Seller Central account.

Bill-to location

For B2B transactions, the bill-to location is the place of business of the registered buyer. However, for B2C transactions, bill-to location is the address declared by the buyer.

Ship-to location

The ship-to location is the location to which shipment is destined that is the destination state or UT which is also referred as place of delivery.

Tax location and tax type for goods

Based on the transaction-related information parameters described above, the tax location and tax type for shipments of products that are taxable are determined as follows:


  1. Products shipped using Fulfilment by Amazon and seller-fulfilled products:
    1. Shipments where bill-from location and bill-to locations are in the same state or UT: In case of B2B transactions, shipments are subject to CGST and SGST/UTGST where bill-from location and bill-to location are in the same state or UT which means that the recipient is located in the same state or UT as fulfilment centre or place of seller business. However, for B2C transactions, shipments are subject to IGST where bill-from location and bill-to location are in same state or UT, but the recipient is located in different state or UT.
    2. Shipments where ship-from location and ship-to locations are in the different state or UT: Shipments are subject to IGST where bill-from location and bill-to location are in different states or UT which means that the recipient of goods is located in a state or UT different from the state or UT of fulfilment centre or place of seller business.
  2. Imported products: Import of goods into India will be subject to BCD in addition to IGST. The IGST will be paid at the time of clearing the goods from the customs station by the importer on record or the CHA on behalf of the importer.

Determine tax Jurisdiction and tax type for services

This requires information on transaction-related information parameters to determine tax jurisdiction and tax type such as, CGST and SGST/UTGST or IGST. These transaction- related information are:

  • Location of the seller
  • Location of the recipient or buyer also known as, bill-to address
  • Place of supply of service

General note applicable to the tax location and tax type

GST being a consumption-based tax, in order to determine the state or UT where the services are consumed, specific place of supply rules are formulated.

According to the Indian GST laws, the services provided to customer located outside India, where place of supply is also outside India and consideration is received in foreign currency, would be regarded as export. Hence, they are subject to GST at zero rate.

Generally, levy of GST depends on the location of the recipient of services. However, in certain transactions, bill-to location and the location where the services are actually consumed may be different such as, services related to immovable properties, restaurant and catering services, grooming and fitness, or health services. In such cases, the levy of GST would depend on the location where the services are actually consumed.

Location of the seller

For GST purposes, registered place of seller business will be considered as the location of the seller. If the services are supplied by a seller located outside India, the services will be considered as an import of service into India.

Location of service recipient

The location of the service recipient will be the address of the customer as available on the ordering details in your Seller Central account.

Place of supply of service

The place of supply of service is typically the location of the service recipient. This rule may be subject to certain exceptions such as transportation of goods, event-based services, and training services. The place of supply of service will have to be determined on a case-to-case basis.

Tax location and tax type for services


  1. Services where location of the seller and the place of supply are in the same state or UT: Services are subject to CGST and SGST/UTGST where location of seller and place of supply are in the same state or UT.
  2. Services where location of the supplier and place of supply are in the different state or UT: Services are subject to IGST where location of seller and place of supply are in the different states or UT.

B2B service transactions

Generally, location of the registered buyer will be considered as place of supply.

Supply of digital content through Amazon.in


  1. Under the GST regime, supply of e-books, music, software, and other intangibles over the internet will qualify as OIDAR service.
  2. If the OIDAR services are provided by offshore sellers to unregistered individuals through Amazon.in, the offshore sellers will be liable to obtain GST registration, discharge IGST on a forward charge basis and file periodical GST return.
  3. The location of seller for services provided by offshore sellers will be outside India.
  4. The tax location is the address of the customer.

Determine tax on the selling price for goods

GST is typically payable on value of goods supplied that is the transaction price or the selling price of the goods. Price variations and ancillary charges as described below could be adjusted against the selling price.

Promotions

The price of goods (taxable value on which GST is calculated) should be reduced by the amount of price-based promotions applied to them. For instance, promotional discounts and trade discounts are reduced from the price of goods for the purpose of calculation of GST. The discount will be adjusted in the invoice itself. Post sale discounts will not be deductible for GST purpose unless such discount is agreed at or before the time of supply.

Shipping & handling charges

Shipping and handling charges will be considered as a part of selling price. In determining the amount of GST, the selling price and separately stated shipping and handling charges should be assigned to, or associated with, the individual items in a shipment. If a consolidated shipping and handling charge is made, it should be allocated by value or any other justifiable parameter and attributed to each item being invoiced or shipped.

Shipping & handling taxability options

Taxes on shipping and handling charges associated with individual items in a shipment should be calculated separately from the related individual items. By default, each shipping and handling charges should be assigned to the same product taxability as its related item. This will generally result in shipping and handling charges associated with taxable items being taxed at the same rate as the taxable items, and shipping and handling charges associated with nontaxable items not being taxed.

Gift-wrap charges

Gift wrap charges are generally treated as taxable because they are considered as part of the selling price of an item. In determining the selling price, separately stated gift-wrap charges should be assigned to, or associated with, the individual items in a shipment as per the same principles adopted for shipping and handling charges.

Gift-wrap taxability options

Taxes on gift-wrap charges associated with the individual items in a shipment are calculated separately from the related individual items. By default, each gift-wrap charges should be assigned the same product taxability as its related item. This will generally ensure that gift-wrap charges associated with taxable items being taxed at the same rate as the taxable items, and gift-wrap charges associated with non-taxable items are not taxed.

Determine tax on the value of service

GST is typically payable on value of services supplied, the price actually paid or payable for the said service. Price variations and ancillary charges as described hereunder could be adjusted against the selling price.

Promotions: The value of service on which the GST is calculated should be reduced by the amount of price-based promotions applied to them. For instance, promotional discounts and trade discounts are reduced from the value of service for the purpose of calculation of GST. The discount will be adjusted in the invoice itself. Post-sale discounts will not be deductible for GST purpose unless such discount is agreed at or before the time of supply.

Customer-based exemption

At present, customer-based exemptions are not available in the GST regime. The tax calculation services will not enable real-time customer-based exemptions in India.

Time of supply of goods or services for GST calculation

All prices of the product and services listed on the store are tax-inclusive and taxes are estimated at ship-generation. A tax invoice will be generated in the system shortly after an order is submitted or immediately before product shipment depending on how a shipment is fulfilled.

Many factors can change between the order checkout date and the tax invoice date, and as a result, the estimated tax amount may differ from the amounts actually charged. For example, rates may change and this could lead to an increase or decrease in taxes charged.

Returns

The customer return or sales returns process for GST charged is a statutory or legal responsibility of the seller selling the relevant items in India. The filing of tax returns and reporting compliance is respective seller’s responsibility.

Products

The tax calculation engine will calculate GST charged on invoices raised for sales by each seller and pay such amounts to the sellers on a monthly or agreed periodical basis. The GST paid would be identical to the amount of GST charged on item price, ship and handling fees, or gift wrap fees or all. The corresponding tax calculation details will be transmitted to the seller in the regular reporting process under the tax library section of your Seller Central account. The tax calculation details need to be reviewed and confirmed under your Seller Central account.

Note: The tax calculation services should treat returns of physical goods as returned merchandise or sales returns. The GST paid on original sales can be claimed as an adjustment by the seller provided that a credit note is issued. In respect of supplies made during the year, credit note can be issued not later than September following the end of the financial year or the date when the seller furnishes annual return, whichever is earlier. For example, for the sales made during financial year 2017-18, credit note can be issued up to September 2018 or the date when seller files the annual return for financial year 2017-18 (whichever is earlier).

Services

If the services are found to be deficient, a credit note will have to be issued in order to claim the adjustment of the GST paid. The credit note can be issued not later than September following the end of the financial year or the date when the seller furnishes annual return, whichever is earlier. For example, for the services provided during financial year 2017-18, credit note can be issued up to September 2018 or the date when seller files the annual return for financial year 2017-18 (whichever is earlier).

Seller tax compliance

GST suspension or cancellations

In the event of cancellation of state GST licenses by the tax authorities due to reasons attributable to you, it is your responsibility to have such suspension or cancellation revoked and to ensure that your state GST license is reinstated or reissued. Amazon reserves the right to prevent, restrict, or suspend your access to all or some of the programs as applicable until such suspension or cancellation is withdrawn and your state GST registration is reinstated by the GST authorities. You will be solely responsible for clearing any goods held up at any check posts or seized by tax authorities as a result of non-compliance of any required documentation requirements.

Additional place of business (APOB) non-compliance

In terms of Section F10.4 of BSA, as a seller listing taxable goods and operating from the Fulfilment by Amazon channel, you shall register applicable site fulfilment centres as APOB in your respective state GSTIN certificates. If APOB address is missing from your GSTIN certificate, Amazon will provide notice via an email notification, or by similar means. In addition to Section 17 of the BSA, you consent to receive such communication through any mode including SMS, email, WhatsApp, and phone call to take corrective actions to add applicable APOB locations in your GSTIN certificate. In case, you fail to add APOB details on your state GSTIN within a period of thirty days from the date we notify you, as per Section 7 of BSA, Amazon reserves its right to prevent, restrict or suspend your access to use of any programs, create removals, dispose or destroy such units as per applicable law.

Regular tax reporting and filing compliance

The filing of applicable GST and tax returns and reporting compliance is your responsibility. In the event of non-filling of returns and other reasons attributable to you resulting in GST non-compliance basis advisory by GST authorities, Amazon reserves its right to prevent, restrict or suspend your access to use of services or any program until you comply with the applicable laws and take corrective actions.

E-invoicing and e-way bill compliance

  • If your e-invoicing and e-way bill services are blocked or suspended by tax authorities for non- filing of GST returns or for any other reasons attributable to you resulting in non-compliance, Amazon reserves its right to immediately halt any transaction, prevent or restrict your access to use of services or any program until you comply with applicable laws and take corrective actions.

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