Legal Checklist: Selling on Amazon USA from India
To sell on Amazon USA from India, you need an Indian business entity, GST registration, an Importer-Exporter Code (IEC), and a method to receive US dollars. You don't need a US company, but you will have US tax obligations.
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To sell on Amazon USA from India, you need an Indian business entity, GST registration, an Importer-Exporter Code (IEC), and a method to receive US dollars. You don't need a US company, but you will have US tax obligations. Getting this structure right from day one prevents major headaches later.
Most people get this wrong because they try to do everything themselves to save a few rupees. This is not the place to cut corners. A clean legal and financial setup is the foundation for a scalable business.
What Indian business structure do I need?
You can start with a Sole Proprietorship, but we strongly recommend a Private Limited Company (Pvt Ltd). A Pvt Ltd protects your personal assets and makes it much easier to raise capital or bring on partners later.
Many founders start as a proprietorship to save on initial costs. This is a mistake. If your product causes harm or you face a lawsuit, your personal assets—your house, your car, your savings—are at risk. With a Pvt Ltd, liability is limited to the company's assets.
Here’s a simple breakdown:
| Feature | Sole Proprietorship | Private Limited (Pvt Ltd) |
|---|---|---|
| Liability | Unlimited (Personal assets at risk) | Limited (Protects personal assets) |
| Setup Cost | Low (under ₹5,000) | Higher (₹15,000 - ₹25,000) |
| Compliance | Minimal | Higher (Annual filings required) |
| Scalability | Difficult to get funding or add partners | Easy to issue shares for funding |
It is far more expensive and complicated to convert from a proprietorship to a Pvt Ltd later than it is to just start as a Pvt Ltd.
What Indian registrations are mandatory for export?
You need two things before you can export anything: a GST number and an Importer-Exporter Code (IEC).
1. GST Registration: This is non-negotiable. You need a Goods and Services Tax Identification Number (GSTIN) to operate any formal business in India, and especially for export. For exporting goods, you will file a Letter of Undertaking (LUT) online. This allows you to export without paying IGST upfront, which is critical for cash flow. A common issue for new sellers is a mismatch in compliance, which can lead to problems. If you run into cash flow issues, you need to know How to Handle GST Suspension Due to Liquidity Issues: A Practical Guide.
2. Importer-Exporter Code (IEC): This is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT). It’s a one-time, permanent registration linked to your business PAN card. You cannot legally export products from India without an IEC. Your shipping provider (like DHL or FedEx) will require this to clear customs.
Do I need a US company or US address?
No, you do not need a US company to sell on Amazon USA. This is one of the most common misconceptions. You can register on Amazon.com as an Indian entity (your Pvt Ltd).
This is a specific question we get so often that we wrote a full guide on it. Read Do I Need a US Company to Sell in the US? for the detailed tradeoffs. The short answer is that for 95% of sellers starting out, using your Indian entity is the right move.
You will, however, need a US address for handling customer returns. You cannot use your Indian address for this. Your options are:
- Your 3PL: If you use a third-party logistics provider in the US, they can handle this.
- Return Management Service: Companies specialize in receiving, inspecting, and even re-selling or disposing of returned inventory for a fee.
Do not use a fake address or a simple mail forwarding service that can't physically handle packages. Amazon will verify this.
How do I handle payments and banking?
Amazon pays in USD, but you need to get that money into your Indian bank account in INR. You have two primary options.
- Amazon Currency Converter for Sellers (ACCS): This is Amazon's built-in tool. It’s easy to set up but expensive. They charge a percentage on the currency conversion, which can be 3.5% or more. This eats directly into your margin.
- Third-Party Payment Services (Recommended): Services like Payoneer or PingPong are the standard for international sellers. They provide you with a "virtual" US receiving account. You link this US account to Amazon Seller Central. Amazon deposits USD into it, and then you withdraw the funds to your Indian business bank account at a much lower conversion fee (typically 1-2%).
When you bring money into India, your bank provides a Foreign Inward Remittance Certificate (FIRC). This document is crucial proof of your export earnings for GST and income tax compliance.
What about US taxes?
Even without a US company, you have US tax obligations. This is not optional.
First, you must submit Form W-8BEN-E to Amazon. This certifies that you are a foreign business. If you fail to do this, Amazon is required by law to withhold 30% of your gross sales.
Second, you will likely need to file a US federal income tax return. Storing inventory in Amazon FBA warehouses creates a "nexus," or a taxable presence, in the United States. This means you must file Form 1120-F (U.S. Income Tax Return of a Foreign Corporation) to report income and expenses generated from your US sales.
Sales tax is simpler. Amazon’s Marketplace Facilitator laws mean Amazon is responsible for collecting and remitting sales tax to the states on your behalf.
US income tax for foreign entities is complex. Do not try to do this yourself. You must hire a qualified US CPA who has experience with non-resident sellers on Amazon. This is a non-negotiable business expense you must factor into your budget. Understanding these costs is part of The Real Capital Requirements for Selling on Amazon USA from India.
Navigating US tax compliance is one of the most complex parts of this process. In the Basecamp E-Com Foundation Program, we connect founders with qualified US CPAs who specialize in working with Indian sellers.