GST, IRS & Sales Tax: What Taxes Does an Indian Seller Owe on Amazon USA?
Tax confusion stops more Indian sellers than any other single issue. The fear of getting it wrong in a foreign country, with the IRS, is real. But the actual situation is far more manageable than most people expect. Here is a complete plain-English breakdown of every tax obligation an Indian seller has when selling on Amazon USA through a US LLC.
India: exports are zero-rated under GST — file an LUT, charge no GST, reclaim input GST.
USA (IRS): a foreign-owned single-member LLC files Form 5472 + a pro-forma Form 1120 every year, even with zero revenue. Missing Form 5472 carries a $25,000 penalty.
BOI: a one-time FinCEN filing.
Sales tax: Amazon collects and remits it for you on Amazon sales.
Texas: an annual franchise tax filing, almost always $0 for small sellers.
What's in this guide
The short answer
If you sell exclusively through Amazon FBA using a Texas LLC formed by Think14, your obligations are: a GST LUT in India (zero-rated export), Form 5472 plus Form 1120 annually with the IRS, a one-time BOI report, and Texas franchise tax. Amazon handles sales tax automatically. This guide explains each one in plain English.
India: GST on exports
When you export goods from India to the USA, the export is treated as a zero-rated supply under GST. This means you do not charge GST on the export transaction, and you can claim a refund of the input GST you paid on raw materials and production costs.
To export without paying IGST upfront, you need to file a LUT (Letter of Undertaking) with your GST authorities before the first shipment. This is an annual filing your CA handles as routine. After exporting, you claim your GST refund on inputs via your regular GSTR-3B and GSTR-1 cycle. Documents needed: shipping bill, commercial invoice in USD, and bank realisation certificate.
The good news: exports are zero-rated under Indian GST. You do not pay tax on the sale, and you recover the GST paid on production inputs. Any CA familiar with export procedures handles this straightforwardly.
USA: the LLC tax structure
When you form a US LLC as a single-member LLC, the standard structure for Indian sellers, the IRS treats it as a disregarded entity by default. The LLC itself does not pay US corporate income tax. However, as a foreign owner of a US LLC, you have specific annual filing obligations regardless of revenue.
Form 5472 — the most critical filing. Every foreign-owned US single-member LLC must file Form 5472 annually, even with zero revenue and zero transactions. This form reports transactions between you (the foreign owner) and the LLC: money transferred in to fund inventory, or distributions taken out. The IRS penalty for failing to file Form 5472 is $25,000 per violation. This is not a soft guideline. Many Indian sellers who set up their LLC independently miss this filing and face serious penalties. Think14 handles Form 5472 as part of the annual compliance service.
Form 1120 — pro-forma return. Form 5472 must be filed attached to a pro-forma Form 1120 (US Corporation Income Tax Return). For most single-member LLCs this has no tax liability; it is filed purely as a wrapper for the 5472. Your accountant or Think14’s compliance team files both together.
BOI Report — one-time filing. All US LLCs must file a BOI (Beneficial Ownership Information) report with FinCEN identifying the beneficial owners of the LLC. For most sellers this is a one-time filing unless ownership changes. Think14 handles this during LLC formation.
US sales tax: the most misunderstood part
Sales tax in the USA is collected at the state level. Each of the 50 states has different rules and rates. There is no single national sales tax rate. For Amazon FBA sellers, Amazon collects and remits sales tax on your behalf in all states under Marketplace Facilitator laws. For Indian sellers selling exclusively through Amazon FBA, you do not need to collect sales tax, file returns, or register for a sales tax permit in any state. Amazon handles this automatically and completely.
Where it gets complicated: if you sell on your own Shopify or WooCommerce store, you become responsible for collecting and remitting sales tax in states where you have nexus. The rule of thumb is simple. Amazon sales: Amazon handles it. Your own website sales: you are responsible. If you sell off-Amazon, our US sales tax nexus checker helps you see where you may have obligations.
Texas franchise tax
All Texas LLCs must file an annual franchise tax return. For most small sellers the actual tax due is zero; the no-tax-due threshold is $2.47M in annualised revenue. Below this you file a No Tax Due information report with no payment required. Think14 handles this filing annually as part of compliance.
Complete summary table
| Obligation | Handled by | Frequency | Risk if missed |
|---|---|---|---|
| GST LUT (India) | Your Indian CA | Annual | IGST payable upfront on exports |
| GST refund on inputs | Your Indian CA | Per return cycle | Working capital locked |
| Form 5472 (USA) | Think14 compliance | Annual | $25,000 IRS penalty |
| Form 1120 pro-forma | Think14 compliance | Annual | Filed with 5472 |
| BOI report | Think14 compliance | One-time | FinCEN penalties |
| Sales tax (Amazon sales) | Amazon | Automatic | N/A — Amazon handles it |
| Texas franchise tax | Think14 compliance | Annual | Zero tax; filing still required |
The bottom line
If you are selling exclusively through Amazon FBA with a Texas LLC through Think14, your US obligations are Form 5472, Form 1120 pro-forma, BOI, and Texas franchise tax, all filed by Think14. Amazon handles sales tax. Your Indian CA handles GST. The structure is manageable. The risk is in missing something; Form 5472 in particular has caught many Indian sellers off guard with its $25,000 penalty. Having a single operator handle both US operations and compliance removes that risk entirely. For the full first-year cost picture, see our US LLC cost calculator, and if you are still deciding on a structure, our EIN guide walks through the setup sequence.
Think14’s US tax compliance service files Form 5472, Form 1120, BOI, and Texas franchise tax for you every year, so you never face the $25,000 penalty for a missed filing.
Frequently asked questions
Does an Indian seller pay GST when exporting products to the USA?
No. Exports from India are zero-rated under GST. You do not charge GST on the export, and you can claim a refund of input GST paid on production by filing an LUT before exporting.
What IRS forms does an Indian seller with a US LLC need to file?
A foreign-owned single-member US LLC must file Form 5472 and a pro-forma Form 1120 annually, even with zero revenue. The penalty for missing Form 5472 is $25,000 per violation. A one-time BOI report with FinCEN is also required.
Do Indian sellers on Amazon USA need to collect and remit sales tax?
For Amazon sales, no. Amazon collects and remits sales tax in all states under Marketplace Facilitator laws. This changes if you sell on your own website outside Amazon.
What is Form 5472 and who needs to file it?
Form 5472 is an IRS information return required from every foreign-owned US LLC annually, even with no revenue. The non-filing penalty is $25,000 per violation.
What is a BOI report?
A one-time filing with FinCEN identifying the beneficial owners of your US LLC, required from all US LLCs. Think14 handles this during LLC formation.