# Income Tax for Online Sellers

> Online selling profit is business income: sales net of returns, minus cost of goods, marketplace fees, shipping, advertising and overheads. Sellers with turnover up to ₹3 crore (when cash receipts are within 5%) can use presumptive taxation at 6% of digital turnover; others keep books, value closing inventory properly, and need a tax audit above ₹10 crore of turnover. The 0.1% TDS deducted by marketplaces is credited against your tax.

Practice: E-commerce Seller Services — https://www.industax.com/services/ecommerce/

Inventory is where most seller profits are misstated — stock at fulfilment centres, in transit or returned damaged must be counted and valued at the lower of cost and realisable value.

We prepare the accounts, choose between presumptive and regular taxation, check audit applicability and file the return with TDS and TCS credits.

## Key facts

| Item | Detail |
| --- | --- |
| Presumptive (44AD) | Turnover up to ₹3 crore; 6% of digital receipts |
| Tax audit | Above ₹10 crore if cash ≤ 5% |
| Inventory | Lower of cost and net realisable value |
| Marketplace TDS | 0.1% under 194-O, creditable |

## Who needs this

- Marketplace and D2C sellers
- Sellers with stock across warehouses
- Sellers unsure about audit

## What's included

- Profit computation
- Inventory valuation
- Audit check
- ITR filing

## Documents

- Reconciled sales data
- Purchase invoices
- Inventory reports
- Expense records

## Process

1. **Close** — Books and inventory finalised.
2. **Decide** — Presumptive vs regular chosen.
3. **File** — ITR filed with credits.

## FAQs

### Can e-commerce sellers use presumptive taxation?

Yes, resident individuals, HUFs and partnership firms (not LLPs or companies) with turnover within the 44AD limit can declare 6% of digital receipts as profit.

### Are marketplace commissions deductible?

Yes, as business expenses under regular taxation. Under 44AD, expenses are deemed to be covered by the presumptive rate.

### Is the TCS collected under GST an income tax credit?

No. GST TCS is credited to your GST cash ledger. The income tax credit is the 0.1% TDS under 194-O.

## Official sources

- Income Tax e-Filing portal: https://www.incometax.gov.in/

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Canonical page: https://www.industax.com/services/ecommerce/ecommerce-income-tax
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.