GST Compliance for Online Traders: Why TaxBuddy’s Annual Plans Work Best for Marketplace Sellers
- Asharam Swain
- 2 days ago
- 9 min read
GST compliance for online traders has become a non-negotiable obligation, especially for sellers operating on platforms like Amazon, Flipkart, and Meesho, where GST registration is mandatory irrespective of turnover. Marketplaces deduct TDS under Section 194-O and collect TCS under GST, which pushes traders to maintain accurate monthly filings and reconciliations. Rising enforcement, MFA rollout across the GST portal, and tighter scrutiny in 2025 make structured compliance essential. With high-volume transactions and multi-platform settlements, online traders need a system that keeps GST filing accurate, timely, and fully aligned with marketplace deductions.
Table of Contents
GST Compliance Essentials for Online Traders
Online traders operate in one of the most compliance-heavy environments in India. Selling on platforms such as Amazon, Meesho, Ajio, or Flipkart automatically brings traders under compulsory GST registration, regardless of turnover. These platforms deduct TDS under Section 194-O and collect TCS under GST, making reconciliation and accurate filing non-negotiable. With the GST portal moving towards phased multi-factor authentication (MFA) and tighter scrutiny on mismatches, traders are expected to maintain consistent accuracy across all filings. As transactions grow, compliance becomes a continuous process that affects settlements, ITC eligibility, and notice risk.
Mandatory GST Registration for Marketplace Sellers
Online marketplace sellers fall under mandatory registration rules because e-commerce operators cannot onboard or release payments to unregistered sellers. The mandate applies even to small traders with turnover below the ₹20 lakh threshold. Registration ensures the GSTIN matches marketplace details, enables TCS credit, and prevents settlement delays. With marketplaces reporting all seller transactions directly to authorities, registration becomes the foundation for tax visibility and structured compliance. The sooner the GSTIN is activated, the sooner sellers can claim credits, file returns, and keep platform accounts running smoothly.
Filing Requirements for Online Traders in 2025
Marketplace sellers typically file monthly or quarterly returns based on their chosen scheme. GSTR-1 covers outward supplies, while GSTR-3B captures liability, ITC, and final tax payment. Regular quarterly filers must ensure invoice reporting is properly grouped under B2B, B2C large, and B2C small categories. High-volume sellers must also track e-invoicing thresholds, which may apply sooner as the government brings down mandatory limits in stages. In 2025, MFA-driven login checks will increase portal security but may slow down manual filing without structured planning.
How TDS and TCS Affect GST Compliance for E-Commerce Sellers
Marketplace settlements always include statutory deductions. TDS under Section 194-O is reported in Form 26AS and AIS, while TCS under GST appears in the GST portal as credits. Traders must reconcile TDS numbers with income tax records and TCS credits with monthly GSTR returns. Any mismatch leads to discrepancies in turnover, ITC claims, or tax liability. Marketplace sellers must review settlement reports, GST returns, and 26AS consistently to avoid under-reporting or duplicate tax calculation. Annual plans that combine GST and ITR support reduce the risk of these mismatches.
Key GST Challenges Faced by Online Traders
E-commerce sellers experience compliance hurdles more frequently than traditional businesses. Marketplace settlements vary across timelines, leading to timing mismatches. Supplier compliance affects ITC claimability. High transaction volume requires line-by-line reconciliation for accuracy. GST notices are increasingly automated, triggered by mismatched invoices, unclaimed TCS, wrong tax rate usage, or missing e-invoices. Weekly updates on rules, especially for e-way bills and return obligations, add further pressure. When multiple platforms are involved, the probability of duplication or error rises sharply.
GST Bank Account Requirements for Online Sellers
Marketplaces insist on a valid current account linked to the GSTIN before final seller approval. The bank account opening form must show the correct business details, including the same PAN and legal name used in GST registration. Any mismatch delays settlement credits or TCS reconciliation. Updated KYC norms now support Aadhaar-based or video verification onboarding, but online traders should still opt for current accounts capable of handling frequent payouts and refunds. Clean documentation ensures uninterrupted marketplace operations and faster GST credit availability.
Input Tax Credit Rules for Marketplace Sellers
ITC is available only when suppliers upload invoices correctly and file their returns on time. Online sellers often miss ITC opportunities because suppliers fail to comply or tag goods incorrectly. ITC can be claimed only when the invoice appears in GSTR-2A/2B and when goods or services relate to the business. Incorrect HSN codes, wrong GSTIN tagging, or mismatched invoice values create restrictions. Marketplace packaging materials, advertising fees, and fulfilment charges often carry ITC eligibility, making reconciliation important for reducing effective tax cost.
Understanding MFA and New GST Portal Rules for 2025
The GST portal is rolling out mandatory MFA in phases. Large taxpayers join first, followed by all sellers by April 2025. MFA will require OTP verification during login, preventing unauthorized access but slowing down manual filing during peak hours. The portal is also tightening error detection, blocking return submission when mismatches exceed thresholds. System-driven scrutiny will highlight variances between GSTR-1, GSTR-3B, TCS statements, and e-commerce operator reports. Sellers need stable compliance systems to adapt to these changes without missed deadlines.
Annual GST Plans vs Monthly Filing: What Works Better?
Annual plans deliver structure and predictability that monthly filing alone cannot offer. Marketplace sellers deal with varied settlement cycles, constant reconciliation, ITC checks, and notices that appear without warning. Annual plans combine filing, review, reconciliation, and audit support, preventing gaps that arise when services are purchased month-to-month. They offer cost efficiency, improved accuracy, and peace of mind, especially for traders handling cross-platform operations. For sellers preparing for MFA, e-invoicing, or threshold transitions, annual plans stay one step ahead of rule changes.
Why TaxBuddy’s Annual Plans Work Best for Marketplace Sellers
TaxBuddy’s annual plans are designed specifically for traders handling multiple marketplace accounts. Automated reconciliation tools match TDS, TCS, and GST return data with marketplace reports. Expert teams ensure invoices, ITC claims, and tax liabilities align with real settlement values. The annual structure prevents last-minute errors and strengthens compliance throughout the year. With high transaction volumes and system-driven scrutiny from tax authorities, TaxBuddy helps maintain accuracy and reduces the possibility of inconsistent filings leading to notices.
How TaxBuddy Assists with TDS/TCS Reconciliation
TaxBuddy’s systems merge 26AS, AIS, GSTR, and marketplace settlement data to identify missing entries or mismatches. This prevents double taxation, unclaimed credits, or erroneous filings. Automated checks compare marketplace reports with TCS credits on the GST portal, ensuring sellers receive the benefits they are entitled to. Credit mismatches, which often lead to higher tax liability or delayed refunds, are minimised. The integrated approach helps sellers maintain clean records and reduces the extra time spent on manual reconciliation.
How TaxBuddy Helps Marketplace Sellers Avoid GST Notices
AI-driven scrutiny often flags inconsistencies between data sources. Common triggers include mismatched turnover reporting, incorrect HSN classification, irregular ITC claims, and delayed filing. TaxBuddy’s compliance systems prevent these issues by aligning seller data with real-time reports from marketplaces. Notices related to TDS/TCS inconsistencies, suppressed turnover, or incorrect invoice reporting are reduced significantly when filings follow a structured, annual pattern. When notices do arise, expert support ensures timely responses aligned with GST law, protecting sellers from penalties.
Conclusion
Online sellers navigate complex GST rules, platform deductions, ITC requirements, and fast-changing compliance norms. A structured, year-round approach reduces risks, preserves ITC benefits, and ensures smooth marketplace operations. TaxBuddy’s annual plans offer the consistency and accuracy needed to manage multi-platform transactions and emerging 2025 compliance rules with confidence. For anyone looking for assistance in tax filing, it is recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides flexibility for different types of taxpayers. Those who prefer a guided, do-it-yourself approach can use the self-filing option, which auto-imports Form 16, bank data, and other information to reduce manual entry. Users who want deeper assistance can choose expert-assisted plans, where tax professionals handle the entire filing process, verify deductions, reconcile income sources, and resolve issues related to mismatches or notices. This dual model helps individuals, freelancers, and business owners pick the level of support that suits their complexity.
Q. Which is the best site to file ITR? The best platform is one that combines automation, accuracy, and personalised support. Income tax returns filed through systems that detect errors early, reconcile data from AIS and Form 26AS, and validate deductions tend to be the most reliable. Platforms such as TaxBuddy provide these features along with expert review, ensuring that taxpayers avoid common mistakes like mismatched income reporting or missed deductions. This makes them a preferred choice for both simple and complex filings.
Q. Where to file an income tax return? Income tax returns can be filed directly on the Income Tax Department’s e-filing portal, which is suitable for those comfortable completing the process independently. Taxpayers looking for a smoother experience often choose platforms such as TaxBuddy, which automate data entry, reduce errors, and offer expert validation. These platforms simplify compliance, especially for users with multiple income sources, capital gains, rental income, or foreign investments.
Q. Is GST registration mandatory for online sellers below ₹20 lakhs turnover? Yes. Sellers on e-commerce platforms must register for GST, regardless of their turnover. Marketplaces cannot onboard or release payments to sellers without a valid GSTIN because TCS needs to be recorded against a registered taxpayer. This requirement ensures transparent tax collection and enables online traders to receive TCS credits, file returns, and maintain settlement compliance across platforms.
Q. Can marketplace sellers claim ITC on TCS collected by platforms? TCS collected by marketplaces appears in the seller’s GST dashboard and can be used to offset GST liability after proper reconciliation. To claim this credit, sellers must match marketplace TCS statements with GSTR data to ensure there are no mismatches in turnover or invoice reporting. Once the TCS amount reflects in the electronic cash ledger, it can be utilised to pay future GST dues, reducing overall tax outflow.
Q. How does TDS under Section 194-O affect GST filings? Section 194-O requires marketplaces to deduct TDS on gross sales before releasing settlement amounts. This TDS appears in Form 26AS and AIS under the seller’s PAN. For accurate GST filing, traders must ensure that the turnover reported in GSTR-1 and GSTR-3B matches the turnover reflected in their TDS statements. Any mismatch results in scrutiny or automated notices, making reconciliation essential for online sellers.
Q. What returns must online traders file monthly or quarterly? Online traders generally file GSTR-1, which reports outward supplies, and GSTR-3B, which summarises tax liability and ITC claims. Depending on turnover and eligibility, some sellers may choose quarterly filing under the QRMP scheme, while others are required to file monthly. High-volume sellers or those nearing e-invoicing thresholds must also manage invoice uploads, e-way bills, and periodic reconciliations, ensuring that marketplace data matches GST returns.
Q. How does MFA impact GST login and return filing in 2025? Multi-Factor Authentication introduces an additional verification layer during GST login. Instead of password-only access, users must authenticate through OTPs or app-based verification. This strengthens security but requires more coordination, especially during peak filing periods. Businesses relying on external accountants or assistants must ensure seamless OTP access to avoid delays in submitting returns before deadlines.
Q. Why do online traders frequently receive GST mismatch notices? Mismatch notices often arise when data reported in GSTR-1, GSTR-3B, marketplace statements, and TCS credits do not align. Differences may occur due to incorrect invoice values, missed entries, wrong HSN codes, or timing differences between marketplace settlements and GST filings. Automated scrutiny systems flag these inconsistencies quickly. Regular reconciliation helps traders avoid penalties and maintain clean compliance records.
Q. What documents are needed for opening a bank account for GST compliance? A current account linked to the GSTIN requires PAN, Aadhaar, proof of address, and valid KYC documents. Banks also request a GST certificate and proof of business, such as partnership deeds or registration documents for proprietors. The account opening form must match the GST registration details, including the legal name and address. Correct alignment ensures smooth TCS credits and avoids settlement delays.
Q. Are annual GST plans better for sellers operating on multiple e-commerce platforms? Annual plans offer consistent coverage across the year and reduce the fragmented filing issues that arise with monthly ad-hoc services. Multi-platform sellers manage varied settlement cycles, marketplace fees, monthly TCS, and seller reports, making year-round reconciliation vital. Annual plans ensure continuous monitoring, fewer mismatches, and faster support when new e-commerce regulations or MFA requirements come into force.
Q. How does TaxBuddy help reconcile Form 26AS, AIS, and GSTR data for online sellers? TaxBuddy integrates data from Form 26AS, AIS, marketplace settlements, and GST returns to identify discrepancies quickly. Automated tools highlight missing invoices, unclaimed credits, or mismatches in TDS/TCS figures. Expert review ensures corrections are applied before filings, reducing the risk of notices. This consolidated approach is especially helpful for sellers managing high transaction volumes across multiple marketplaces.
