Small e-commerce sellers in India could soon get relief from one of the biggest compliance challenges associated with marketplace selling: maintaining separate GST registration in multiple states.
The Central Board of Indirect Taxes and Customs (CBIC) is preparing to place a proposed simplified GST registration scheme for small e-commerce suppliers before the GST Council. The framework could allow eligible sellers to operate through e-commerce marketplaces and their warehouses across multiple states without obtaining a separate GST registration in every state where their inventory is stored.
The proposed framework is expected to be discussed at the upcoming GST Council meeting on September 12, 2026. However, this is not yet law, and e-commerce sellers should continue following the existing GST requirements until any changes are formally notified.
What Is the Proposed GST Registration Change for E-Commerce Sellers?
Under the proposed mechanism, eligible small suppliers could potentially maintain one GST registration instead of obtaining separate registrations in every state where an e-commerce operator stores their products.
One of the key proposals is to treat the warehouse of an e-commerce operator as the supplier’s place of business in that state.
This could be particularly relevant for sellers using marketplace fulfilment networks such as Amazon FBA, Flipkart fulfilment centres, and other third-party e-commerce warehouses.
The proposed framework is intended to address the compliance difficulties faced by small businesses that sell products nationwide while managing their business, accounting, and operations from a single location.
This Is a Proposal, Not a New GST Rule Yet
The distinction is important for Amazon and other marketplace sellers.
The GST Council approved the concept of a simplified registration mechanism for small suppliers selling through electronic commerce operators across multiple states in September 2025. The detailed framework and modalities are now being developed.
Therefore, sellers should not cancel existing GST registrations or change their current compliance structure based solely on this proposal.
Until an official notification or amendment comes into effect, existing GST requirements continue to apply.
Why Is GST Compliance Difficult for Amazon and Other Marketplace Sellers?
The issue becomes particularly complicated when an online seller uses fulfilment or warehouse infrastructure outside the state where the seller’s principal business is located.
For example, consider a seller registered in Maharashtra who sells products throughout India using an e-commerce marketplace.
If inventory is stored in fulfilment centres in Karnataka, Delhi, Telangana, or other states, the existing GST framework can create additional registration and compliance requirements.
This can result in:
- Multiple GST registrations
- State-specific GST compliance
- Additional returns and reconciliations
- Record-keeping requirements across states
- Input Tax Credit (ITC) complications
- Greater accounting and professional costs
- Potential GST notices and registration-related disputes
For a large company, maintaining multiple registrations may be manageable. For a micro or small online seller, however, the additional compliance can become a significant barrier to expanding nationally.
How Could the Proposed Single-State GST Registration Work?
The exact framework is yet to be finalised, but the reported proposal is built around simplifying compliance for micro suppliers selling through e-commerce operators.
Under the proposed mechanism:
1. One Primary GST Registration
An eligible small seller could potentially operate with a GST registration in one state rather than obtaining separate registrations merely because inventory is held in marketplace warehouses elsewhere.
2. Marketplace Warehouses Could Be Treated Differently
An e-commerce operator’s warehouse could potentially be treated as the supplier’s place of business in the relevant state for the purposes of the proposed mechanism.
3. E-Commerce Platforms Could Have Greater Compliance Responsibility
E-commerce operators could be required to ensure that sellers using their platforms are properly registered and compliant with the applicable requirements.
4. Eligibility Would Be Limited
The facility is expected to target micro and small suppliers, rather than large businesses. A threshold is expected to be prescribed, although the precise threshold has not yet been announced.
5. Existing GST Obligations Would Not Automatically Disappear
The proposal is aimed at simplifying registration and state-level compliance. It should not be interpreted as eliminating GST reporting, tax payment, invoicing, reconciliation, or other applicable obligations.
Why This Could Be Important for Amazon FBA Sellers in India
The proposal could have particular relevance for sellers using Amazon FBA and other marketplace fulfilment models.
In a traditional marketplace model, a seller can operate its business from one location but use a fulfilment network distributed across multiple states.
This creates a mismatch between where the seller operates and where the seller’s inventory is physically stored.
The proposed GST framework attempts to address this problem by reducing the need for small sellers to establish a separate GST presence simply because their marketplace partner stores inventory in another state.
For Amazon sellers, this could potentially make nationwide expansion easier and reduce the administrative burden associated with operating a multi-state fulfilment network.
What About Input Tax Credit (ITC)?
Input Tax Credit is another important part of the proposed reform.
E-commerce transactions can involve several parties and states, including:
- Seller
- E-commerce marketplace
- Fulfilment or warehouse location
- Logistics provider
- Customer
- GST authorities
Incorrect GST reporting, missing invoices, or mismatches in outward supply information can create problems for the ITC chain.
The government therefore faces a balancing act: simplify GST compliance for small sellers while ensuring that tax reporting and input tax credit remain reliable.
Tax experts have also highlighted the importance of maintaining a secure ITC chain while reducing the compliance burden for smaller online businesses.
Who Could Benefit From the Proposed GST Scheme?
The proposed framework is expected to focus on small and micro e-commerce suppliers.
Potential beneficiaries could include:
- Amazon sellers
- Flipkart sellers
- D2C brands using marketplace fulfilment
- Small manufacturers selling online
- Micro enterprises
- Home-grown consumer brands
- Small retailers expanding through marketplaces
- Sellers using third-party fulfilment centres
However, large businesses are not expected to be the primary beneficiaries because they generally have the infrastructure and resources to manage state-level registrations and compliance.
The government is expected to specify an eligibility threshold before the scheme becomes operational.
Will Amazon Sellers Still Need GST Registration?
For now, yes — sellers should continue complying with the existing GST framework.
The proposed single-state registration mechanism has not yet replaced the current GST framework.
The GST Council is expected to consider the detailed framework on September 12, 2026. Until the government issues the necessary notification, amendment, or other legal mechanism, sellers should not assume that they can immediately stop maintaining existing state GST registrations.
This distinction is especially important for sellers whose inventory is already located in multiple states.
What Should E-Commerce Sellers Do Now?
Amazon, Flipkart, and other marketplace sellers should not make immediate changes solely because of the proposed reform.
Instead, sellers should:
- Review their current GST registrations.
- Identify every state where their inventory is stored.
- Check their marketplace fulfilment arrangements.
- Reconcile GST returns and marketplace reports.
- Review input tax credit balances and mismatches.
- Monitor the September 12 GST Council meeting.
- Wait for the official notification and detailed eligibility conditions.
- Reassess their GST structure once the final scheme is notified.
Businesses should also consult their GST adviser before surrendering or restructuring any existing registration.
What Happens Next?
The next major development is the GST Council meeting scheduled for September 12, 2026.
The Council is expected to consider the detailed framework for the simplified registration mechanism that was approved in principle in 2025.
The most important details sellers will need to watch include:
- Eligibility turnover threshold
- Eligible categories of e-commerce suppliers
- Whether the scheme covers all marketplace fulfilment models
- Treatment of marketplace warehouses
- Inter-state supply rules
- GST return requirements
- Input Tax Credit treatment
- E-commerce operator responsibilities
- TCS and reporting requirements
- Conditions for maintaining the single registration
- Process for existing sellers with multiple GST registrations
Until these details are formally notified, the proposal should be viewed as a potential GST reform rather than a current exemption.
What This Means for India’s E-Commerce Industry
If implemented as proposed, the reform could be significant for India’s growing online seller ecosystem.
The biggest impact may not simply be a reduction in the number of GST registrations. More importantly, it could lower the compliance cost of scaling an e-commerce business nationally.
For a small seller, access to a nationwide fulfilment network can be an important growth advantage. If GST compliance becomes easier to manage alongside that infrastructure, more micro and small businesses could potentially expand beyond their home states.
The reform could therefore support the broader growth of India’s e-commerce, marketplace, D2C, and small-business ecosystem while shifting more responsibility toward e-commerce operators for seller verification and transaction reporting.
However, the final impact will depend on the conditions and safeguards ultimately approved by the GST Council.
Ecom Ranker Takeaway
The proposed GST reform could be a major compliance relief for small Indian e-commerce sellers, particularly those using marketplace fulfilment centres across multiple states.
But sellers should remember one crucial point: the single-state GST registration framework is currently a proposal, not an operative GST rule.
Until the GST Council approves the final mechanism and the government issues the required legal notification, Amazon and other marketplace sellers should continue following their existing GST registration and compliance obligations.
EcomRanker will continue tracking the GST Council’s decision and its impact on Amazon sellers, marketplace businesses, and India’s e-commerce industry.
Frequently Asked Questions
Will Amazon sellers need only one GST registration across India?
Not yet. A single-state registration mechanism for eligible small e-commerce suppliers has been proposed, but it has not yet replaced the existing GST framework.
Can Amazon FBA sellers currently use warehouses in other states without GST registration there?
Sellers should continue following the applicable existing GST requirements. The proposed reform may change this for eligible small suppliers if and when it becomes law.
When will the proposed GST scheme be discussed?
The detailed framework is expected to be considered by the GST Council at its September 12, 2026 meeting.
Will all e-commerce sellers qualify?
No. The proposed facility is intended for small or micro suppliers, and an eligibility threshold and other conditions are expected to be prescribed.
Will large e-commerce sellers benefit from the proposal?
The proposal is primarily intended to help micro and small suppliers. Large businesses are not expected to be the target beneficiaries.
Does the proposal eliminate GST compliance?
No. The objective is to simplify registration and state-level compliance. Sellers would still need to meet applicable GST reporting, tax payment, and other compliance requirements.
What should Amazon sellers do right now?
Continue complying with the existing GST framework, review current registrations and fulfilment locations, and wait for the final government notification before making structural changes.
