GST for D2C Brands Selling Online

A direct-to-consumer brand usually sells through more than one channel at once — its own Shopify store, an Instagram checkout, and a listing on Amazon or Myntra — and each of those channels can carry different GST obligations for the exact same product. The rule that decides most of it is not turnover, it is whether an e-commerce operator sits between you and the customer. Get that distinction right and the rest of registration, tax collection and invoicing follows from it.

Registration: your own website vs a marketplace

The same GSTIN, or the need for one, depends on the channel a given order travels through — not on the brand as a whole.

Selling through a marketplace. Section 24 of the CGST Act lists categories of suppliers who must register compulsorily, with no turnover exemption. Anyone supplying goods or services through an e-commerce operator that is required to collect tax at source is on that list. Practically: the moment you list a product on Amazon, Flipkart, Myntra or Nykaa and route the sale through their checkout, you need a GSTIN before that first sale, even if your annual revenue is a fraction of the normal threshold.

A relaxation effective from October 2023 lets small suppliers make intra-state supplies of goods through an e-commerce operator without mandatory registration, subject to conditions — the ECO must meet notified requirements and the supplier's turnover must stay under the applicable limit. This does not extend to inter-state supplies through a marketplace, and the exact conditions are set out in the relevant notification, so confirm them on gst.gov.in before deciding you qualify. Treat it as an exception worth checking, not a default you can assume.

Selling only through your own website. If checkout happens on infrastructure you operate — a Shopify or WooCommerce store, your own app — you are not supplying "through" an e-commerce operator in the Section 24 sense, because Shopify does not list your product to its own customer base or collect tax on your behalf. Ordinary thresholds apply: ₹40 lakh in aggregate turnover for a supplier of goods, ₹20 lakh for services, with lower limits (typically ₹20 lakh for goods, ₹10 lakh for services) in certain special-category states. The mechanics of that threshold are covered in GST registration turnover limit.

Most D2C brands run both channels simultaneously, which means the marketplace-driven GSTIN requirement can bind well before the website-driven one would. Once you are registered for the marketplace channel, that registration covers your own-website sales in the same state too — you do not get two GSTINs for two channels in one state.

Selling across state lines

Turnover thresholds get overridden the moment a sale crosses a state border. Under Section 24, a person making an inter-state taxable supply of goods must register irrespective of turnover — a D2C brand in Delhi shipping one order to Bengaluru is, by that rule, required to be registered from day one, not once it crosses ₹40 lakh.

Services are treated more leniently: a notified exemption relieves inter-state suppliers of services below the normal threshold from compulsory registration in many cases, which matters if your D2C business also sells digital add-ons, subscriptions or services alongside physical goods. Where a supply is genuinely a service and where it counts as inter-state depends on your product and delivery model, so this is a case for hedging and checking rather than assuming.

The marketplace relaxation described above only softens this for intra-state supplies through an ECO — it does not reach inter-state goods sales, marketplace or not. A brand shipping nationally through Amazon FBA is inter-state by nature for most orders and needs registration regardless of the relaxation.

Marketplace TCS and who collects what

When a sale runs through a marketplace, the operator collects tax at source under Section 52 on the net value of taxable supplies made through it, and deposits that with the government against your GSTIN. You claim it back as available credit in your electronic cash ledger when filing, reducing what you owe.

The combined TCS rate was 1% (split as CGST + SGST, or IGST for inter-state) for several years, and was reduced to 0.5% total with effect from 10 July 2024. Rate changes are made by notification and this is the kind of figure that is worth re-confirming against current CBIC guidance before you reconcile a TCS credit statement, rather than trusting a fixed number in any blog post, including this one.

TCS is separate from, and does not replace, your own output GST liability on the sale — you still charge and remit GST on the invoice value; TCS is an advance collection mechanism the marketplace performs alongside that. The mechanics of TCS versus TDS, and how each shows up in your returns, are covered in GST TDS and TCS explained.

Shopify, WooCommerce, Razorpay and similar tools are not e-commerce operators for this purpose and do not deduct TCS — a payment gateway settling funds to your account, or a storefront platform you host your own catalogue on, is not "facilitating" a sale between third parties the way a marketplace listing is. If you sell through Shopify and separately through Amazon, expect TCS on the Amazon leg only.

Place of supply for a shipped order

For a B2C order of physical goods that you ship to a customer, place of supply is the location where delivery terminates — the customer's address, not your warehouse and not your billing office. If that delivery location is in a different state from where you are registered, the supply is inter-state and you charge IGST; if it is in the same state, you charge CGST + SGST.

This is straightforward for goods but gets more involved for services, digital products, and situations with multiple delivery addresses on one order — the general framework, including exceptions, is in place of supply rules under GST. Getting this wrong on a high volume of small B2C orders compounds quickly, since it is the wrong tax type on every invoice, not just the wrong amount.

Invoices, e-invoicing and the QR code

Every taxable sale needs a valid GST invoice with the fields the rules require — GSTIN, invoice number, HSN code, taxable value, tax rate and amount, and the rest of the standard set covered in GST invoice format and rules. For a D2C brand this is usually generated automatically by the storefront or order management system, but the underlying fields are the same whether a human or software produces the document.

E-invoicing — generating an Invoice Reference Number (IRN) through the government portal before an invoice is valid — applies once your aggregate turnover crosses ₹5 crore in any year from 2017-18 onward, and it applies to B2B and export invoices, not to ordinary B2C sales. A D2C brand selling directly to consumers is typically issuing B2C invoices that sit outside the e-invoice mandate entirely, even past the ₹5 crore mark, unless it also does B2B or bulk/wholesale business on the side. See e-invoicing threshold for the current position.

Separately, very large B2C sellers face a dynamic QR code requirement on B2C invoices, intended to let a customer scan and verify or pay. The turnover threshold for this has been reported at a much higher figure (in the hundreds of crores) than the e-invoicing threshold, and enforcement dates have moved in the past — if your D2C business is anywhere near that scale, confirm the current threshold and requirements directly against CBIC guidance rather than relying on a fixed number here.

Returns, refunds and credit notes

D2C return rates are typically far higher than wholesale, which makes credit notes a routine document rather than an edge case. When a customer returns goods or you refund an order after the invoice was issued, you adjust your output tax liability by issuing a credit note referencing the original invoice, not by editing the original invoice. The rules on timing, format and the return period in which a credit note must be reported are in GST debit note and credit note.

On the return-filing side, D2C sellers report outward B2C supplies in GSTR-1 — split between the "B2C large" table for invoices above the notified inter-state threshold and "B2C small" (aggregated by state and rate) for the rest — and then GSTR-3B to declare summary liability and pay tax, net of the TCS credit collected by any marketplace channel. COD orders that are later refused at the doorstep are typically never invoiced as a completed sale in the first place, so they usually do not need a credit note at all — confirm the exact point in your order flow where the tax invoice is generated relative to delivery confirmation, since that determines whether a doorstep refusal needs one.

Free samples, influencer stock and warehouses

Two operational patterns specific to D2C brands are worth flagging separately from the channel rules above.

Free samples and influencer seeding. Section 17(5)(h) blocks input tax credit on goods disposed of as gifts or free samples. Sending product to an influencer with no consideration attached is generally treated the same way — you paid GST on the inputs, but you cannot claim that credit back on stock you gave away for free. This is one of the more commonly missed ITC reversals in D2C accounting precisely because the marketing team, not finance, initiates the shipment. There are narrower fact patterns — a paid collaboration structured as a service rather than a gift, for example — where the answer can differ, so treat this as a default assumption and get it checked before relying on it for a large seeding campaign.

Warehouses in another state. Using a regional fulfillment center or 3PL warehouse outside your home state to speed up delivery generally requires either a separate GST registration in that state or adding it as an additional place of business (APOB) under your existing registration, depending on the structure of the arrangement and who owns the stock at that location. This is easy to overlook when a 3PL contract is signed by operations rather than finance — confirm the registration implications before goods move into a new state, not after the first invoice from that location.

Managing more than one GSTIN across states, and what changes in how you file, is covered in multiple GST registrations under one PAN.

Whichever channels you run, the common thread is that GST obligations attach to how a sale happens, not to the brand as a single entity — a brand selling the same product through its own site and through Amazon can owe different things on each order. Our GSTIN verification API returns registration details and GSTR filing history in one call, which is useful for checking marketplace, supplier or influencer GSTINs before you rely on them; background on how a related use case works is in GST for e-commerce sellers and GST verification on Shopify.

Frequently asked questions