How to Claim Input Tax Credit For Purchases Made on Amazon India?
Many business owners who are registered under Goods and Services Tax can now avail of the benefit of “Input Tax Credit” from purchases made on Amazon India. Before we explain the process as to “How can you claim the input tax credit for purchases made on Amazon”, let’s first understand some basic concepts.
What is "Input Tax Credit" under GST?
“Input Tax Credit” essentially means the credit of GST paid on your purchases against the liability of GST that would arise from your sales/services. Let’s understand this with the help of an example. Let’s suppose that you have made sales of INR 1,00,000 and collected 18% GST on this sale. Your total invoice value is INR 1,18,000. You are supposed to pay the GST collected i.e. INR 18,000 to the government by way of monthly return filing. Now for the same month, let’s suppose that you made business purchases of INR 70,000 and paid 18% GST on them. In this case, your purchase invoice would be INR 82,600 (INR 12,600 being the GST amount). Now, as per the concept of Input Tax Credit, a taxpayer registered under Goods and Services Tax can adjust the input GST paid during the month which is INR 12,600 in this case, against the output liability, which is INR 18,000. So on a net basis, the taxpayer will pay INR 5400 (INR 18,000 minus INR 12,600) as the GST liability for that month.
What is Amazon Business?
Amazon business account is a facility provided by Amazon India to business owners to order business supplies from its portal. Amazon will provide a GST invoice for all purchases made from the business account and thus business owners can claim the input tax credit on such purchases.
How to register for Amazon Business?
Firstly, business owners with a valid Goods and Services Tax Registration Number must register as a business on Amazon India. You can register for Amazon Business Account Here. Once you click on this link, you will be redirected to Amazon India Business User registration page. You will have to click on Signup.
Once you have clicked on Signup, the portal will take you to the business registration page, wherein you will be asked your business-related information such as “Legal name of your business”, “Type of business entity”, “GSTIN” etc. Once you have provided all this information, your amazon business account will be created and you will get the confirmation on your email too.
Once your account is verified by the Amazon Business team, you can start making business orders from Amazon and will be eligible to claim the input tax credit.
Still have questions on your input tax credit, send your queries at [email protected]