Introduction
Marketplace fulfilment services — FBA (Fulfilment by Amazon), Flipkart F-Assured, and similar programmes — involve storage, packing, and shipping of seller inventory. The question arises: How are fulfilment fees taxed under GST?
This guide explains the GST treatment of fulfilment fees and the ITC implications.
Legal Framework: GST on Warehousing and Fulfilment Services
Warehousing and Storage Services
Warehousing and storage services attract 18% GST. The applicable SAC code is 996729.
Fulfilment Services
Fulfilment services — including picking, packing, and shipping — attract 18% GST.
GST Treatment of Fulfilment Fees
Marketplace Charges
The marketplace charges 18% GST on fulfilment fees.
Seller's ITC
The seller can claim ITC on the GST charged by the marketplace, subject to the conditions under Section 16.
Invoice Requirement
The marketplace must issue a tax invoice with its GSTIN and the seller's GSTIN.
Common Fulfilment Fees
- Storage Fees: Monthly storage charges.
- Pick and Pack Fees: Per-unit fulfilment charges.
- Shipping Fees: Delivery charges.
- Long-Term Storage Fees: Penalty for slow-moving inventory.
Documentation Requirements
- Tax Invoice: From the marketplace with GSTIN.
- Fulfilment Report: Documentation of the services.
- Payment Records: Proof of payment.
Best Practices
- Claim ITC: Claim ITC on fulfilment fees.
- Reconcile GSTR-2B: Reconcile invoices with GSTR-2B.
- Maintain Records: Maintain all fulfilment invoices and reports.
- Seek Professional Assistance: For complex arrangements.
Conclusion
Marketplace warehousing and fulfilment fees attract 18% GST. Sellers can claim ITC on these charges. Proper documentation and reconciliation are essential.
Using marketplace fulfilment services? Anuj Desai & Associates provides expert guidance on GST compliance. Contact us today.
Contact us:
- Email: office@anujdesaiassociates.com
- Phone: 9619456656
- Website: https://anujdesaiassociates.com
- LinkedIn: linkedin.com/in/ca-anuj-desai-122547230