Is Amazon Dropshipping Legal in India? GST, Policies & Real Risks Explained (2026)

✅ Quick Summary

• Yes, Amazon dropshipping is legal in India, but only if you follow Amazon’s policies and Indian tax laws.

• You must not buy products from another online retailer and ship directly to Amazon customers. This is why choosing 👉 Fashion dropshipping suppliers in India is critical, as they provide proper GST invoices, stable inventory, and policy-compliant fulfillment instead of retail-to-customer shipping.

• GST registration is mandatory in most cases.

• Many sellers fail not because dropshipping is illegal, but because they violate Amazon policies unknowingly.

• With the right suppliers, invoices, GST compliance, and branding, Amazon dropshipping can be a scalable and safe business model in India.

What Is Amazon Dropshipping?

If you’re new to the concept, this Amazon India dropshipping guide explains the model, responsibilities, and compliance requirements in more detail.

Amazon dropshipping is a business model where:

• You list products on Amazon

• A third-party supplier stores and ships the product

• You earn the margin between your selling price and supplier cost

You do not hold inventory, but you are fully responsible for:

• Product quality

• Delivery

• Returns

• Customer experience

This responsibility part is very important for legality.

Is Amazon Dropshipping Legal in India?

✅ Short Answer: Yes, It Is Legal

But legality depends on how you do it.

Amazon allows dropshipping, but disallows retail arbitrage dropshipping.

Amazon Dropshipping Policy

Amazon allows dropshipping ONLY IF:

Requirement	What It Means
You are the seller of record	Your brand name appears on invoice & packaging
No third-party branding	No Flipkart, Meesho, AliExpress branding
You handle returns	Customer returns come to you
Transparent invoices	Invoice shows you as seller

❌ Not Allowed:

• Buying from Amazon/Flipkart and shipping to Amazon customers

• Using supplier invoices with another company’s name

• Letting suppliers handle customer service directly

📌 Important: Most account suspensions happen due to invoice mismatch.

GST & Tax Rules for Amazon Dropshipping in India

Is GST Mandatory?

Yes, in most cases.

Amazon requires:

• GST registration

• GSTIN linked to Seller Central

• GST-compliant invoices

Why GST Is Required

Because Amazon is an interstate marketplace, GST is mandatory even if:

• Your turnover is below ₹40 lakh

• You work from home

GST Flow in Amazon Dropshipping (Table)

Step	Responsibility
Customer places order	Amazon
You generate invoice	You (with GST)
Supplier ships product	Your supplier
GST collected	You
GST filed monthly	You

⚠️ If GST is ignored → account suspension + penalties

Real Risks of Amazon Dropshipping in India

1️⃣ Account Suspension

• Wrong invoices

• Supplier branding

• Policy violations

2️⃣ Fake or Low-Quality Suppliers

• Leads to high returns

• Negative reviews

• Listing suppression

3️⃣ Cash Flow Issues

• Amazon payouts are delayed

• Returns block funds

4️⃣ GST Non-Compliance

• Notices from tax department

• Heavy penalties

Pros and Cons of Amazon Dropshipping in India

✅ Pros

Benefit	Why It Matters
Low investment	No inventory cost
Scalable	Easy to add products
Amazon traffic	Built-in buyers
Location-independent	Work from anywhere

❌ Cons

Risk	Reality
Policy strictness	One mistake = suspension
Thin margins	Price wars
Supplier dependency	Quality control issues
Returns	Amazon has customer-first policy

Real-World Experience (Why Sellers Fail)

Many of these failures also come from ignoring evolving market shifts, which is why sellers should stay updated on dropshipping trends to watch in 2026.

From real seller experience in India:

• 70% sellers fail due to wrong suppliers

• 20% fail due to GST & invoice issues

• Only 10% fail due to “market competition”

Dropshipping is not illegal — poor execution is.

Experienced sellers always:

• Verify suppliers

• Keep invoices clean

• Use branding

• Track performance metrics weekly

Is Amazon Dropshipping Better Than Shopify in India?

Factor	Amazon	Shopify
Traffic	High (built-in)	You pay for ads
Policy risk	High	Low
Control	Medium	Full
Trust	Very High	Needs branding

Many Indian sellers start with Amazon for demand validation, but long-term success often depends on understanding the difference between marketplace selling and brand ownership, which is explained in detail in Amazon vs brand building for sellers.

👉 Many Indian sellers start with Amazon, then move to Shopify for brand control.

Role of Verified Suppliers in Amazon Dropshipping

Platforms like Snazzyway help reduce major risks.

They:

• Have 12+ years of experience

• Work with 4,000+ sellers globally

• Provide Amazon-compliant dropshipping & supply solutions

• Focus on verified suppliers and invoice clarity

This matters because supplier reliability is the backbone of legal dropshipping.

For sellers evaluating clothing-focused supply models, this detailed review on whether Snazzyway is good for clothing dropshipping in 2026 offers a deeper breakdown.

Best Practices to Do Amazon Dropshipping Legally in India

Choosing the right ecosystem also matters, and sellers can compare options using this best dropshipping platforms in India for 2026 guide.

✔ Checklist (Save This)

• ✅ GST registered

• ✅ Seller name on invoice

• ✅ No third-party branding

• ✅ Verified Indian suppliers

• ✅ Return address under your control

• ✅ Regular policy audits

Sellers who want to reduce execution errors should also review essential resources and tools for Amazon dropshipping in India to manage compliance, suppliers, and operations efficiently.

Common Myths (Busted)

For sellers still unsure about viability, this honest guide on whether dropshipping is still worth it in India in 2026 offers a realistic perspective.

❌ “Amazon bans all dropshipping”

✅ False — only policy-violating dropshipping

❌ “GST is optional”

✅ False — mandatory

❌ “You can use Flipkart suppliers”

✅ Very risky & usually disallowed

Final Recommendation (Read Carefully)

Amazon dropshipping is legal and profitable in India only if you treat it like a real business, not a shortcut.

Who Should Do It?

• Beginners with low capital

• Sellers who can manage compliance

• Long-term brand builders

• Sellers aiming for long-term stability often move beyond pure dropshipping and explore how to build a brand with no inventory using white-label models.

  
  

Who Should Avoid It?

• Those ignoring GST

• People using random suppliers

• Anyone chasing “quick money”

👉 Compliance + suppliers + patience = success

Frequently Asked Questions (FAQs)

❓ Is Amazon dropshipping legal in India in 2026?

Yes, if you follow Amazon policies and GST laws.

❓ Do I need GST for Amazon dropshipping?

Yes, GST is mandatory.

❓ Can I dropship from Flipkart to Amazon?

No, this violates Amazon policy.

❓ Can beginners start Amazon dropshipping?

Yes, but only with proper guidance and suppliers.

❓ Is Amazon FBA better than dropshipping?

FBA offers more control but needs higher investment.