Since 17 August 2026, cancelling an Amazon order can cost you up to 10% of the order value — plus GST on top of the penalty. The bigger change is quieter: the penalty also applies when Amazon cancels the order for you because it did not ship on time. Here is exactly how it works and how to keep it off your settlement.
The new cancellation fee tiers
The fee used to be linked to your category referral rate. It is now a percentage of the order value, applied to Easy Ship and Self Ship orders:
- 10% for orders below Rs 10,000
- 8% for orders from Rs 10,001 to Rs 50,000
- 5% for orders from Rs 50,001 to Rs 1 lakh
- 2% for orders above Rs 1 lakh
Amazon's seller notice adds 18% GST on the cancellation fee. So the real cost of the 10% tier is 11.8% of order value, not 10%.
What it costs, worked through
| Order value | Rate | Fee | 18% GST | You pay |
|---|---|---|---|---|
| Rs 1,499 | 10% | Rs 149.90 | Rs 26.98 | Rs 176.88 |
| Rs 8,000 | 10% | Rs 800 | Rs 144 | Rs 944 |
| Rs 25,000 | 8% | Rs 2,000 | Rs 360 | Rs 2,360 |
| Rs 75,000 | 5% | Rs 3,750 | Rs 675 | Rs 4,425 |
| Rs 1,50,000 | 2% | Rs 3,000 | Rs 540 | Rs 3,540 |
On a typical low-ticket order the penalty can wipe out the margin on several successful sales. One cancelled Rs 1,499 order costs Rs 176.88 — more than many sellers make on that product across a handful of deliveries.
When the fee applies, and when it does not
- Applies: you cancel an order for any reason other than a buyer request — most often because the stock was not actually available.
- Applies: Amazon automatically cancels the order because you did not ship and confirm it within 24 hours of the estimated ship date. You did not press cancel, but you still pay.
- Does not apply: the buyer requests the cancellation.
Amazon has said the revised fee affects under 1% of orders, according to the Free Press Journal. For a well-run account that is plausible. For an account with loose stock counts or an unreliable dispatch routine, it is not a figure to rely on.
How to keep cancellation fees off your settlement
- Make listed stock match physical stock. Most seller-side cancellations are stock that sold on another channel, or was never there. If the same inventory sells on Meesho or Flipkart, you need one rule for who holds which units.
- Confirm shipment the same day you dispatch. The auto-cancel clock runs on confirmation in Seller Central, not on the parcel leaving your shelf.
- Watch your handling time. A handling time shorter than you can reliably meet sets an estimated ship date you will miss. Set it to what you actually achieve on a busy day.
- Pause, do not cancel. If a product goes out of stock, set its quantity to zero before orders arrive, rather than cancelling the orders after.
- Plan the festive peak. Order volume and courier delays both rise in October and November, which is exactly when a missed ship date is most likely.
Flipkart changed its penalties the same month, with flat per-shipment charges, while Meesho kept its zero-penalty policy — compare them in Flipkart seller penalties 2026 and Meesho’s Zero Penalty policy.
The cancellation fee landed alongside a closing fee increase. See all of Amazon India's 2026 fee changes for the full picture. If dispatch discipline is the weak spot, our Amazon account management service tracks ship-by dates and account health as a daily routine.
Sources
Checked on 30 September 2026. Fees change often, so confirm the current figure for your category in Seller Central before repricing.