What license do I need for drop shipping model

1) You can operate as an individual. Individual or sole proprietor have same status. For individual or sole proprietor there is no separate registration.

2) As you are operating as an ecommerce operator from India and your principal place of business is in India therefore you need GST registration irrespective of the turnover.

3) Filing of return under GST depends on the turnover. Profit is irrelevant. In your case it is export of services to foreign customers therefore you don't need to charge GST on the commission part subject to obtaining LUT.

We may assist you in GST registration and return filing.

As you are in export of services you also need IEC code (Import Export Code).

If I am not wrong your business model is like Amazon or flipkart, the only difference is you provide services outside India. Supplier and purchaser are based out of India. You just receive orders from outside India which is fulfilled by China.

In case of export of services there are two options either pay GST and claim refund or export without payment of taxes by obtaining LUT from GST authorities.

LUT is letter of undertaking by the exporter. It needs to be applied online.

According to me GST registration and IEC code both are mandatory. Some professionals would advice you to go for GST only but I recommend you for both as it is one time activity.

IEC is required both for export and import of goods and services. You are providing servic.es to foreign customers which intself is export

Hi,

The LUT is optional. However, it is advisable to obtain the same because if you will not take LUT, you will end up blocking a lot of working capital. Later on, basis our current cases, claiming refund from the department is a very tough task.

Hence it is suggested that LUT should be applied so that you need not pay GST on nil rated or exempt supplies and then claim refund. The best option for you would be :

Sole proprietor+ GST+IEC +LUT

Thanks

Damini

Call me at 7060029944

Hi,

1. You can do the business as an individual after obtaining PAN and TAN.

2. Yes, GST certificate will be required.

3. What nil declaration are you referring to?

Please feel free to call/ revert in in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hi,

1.individual or sole propreitorship are same and you can work accordingly.

2. Yes, GST would be required.

3. No.

Regards,

Nikhil.

X need not to pay GST on only commission part not on entire turnover of 3lacs.

However, if you meant that 3 lacs is commission amount then you are correct.

HI,

The GST and Income tax fall under different tax regimes. GST is indirect tax and Income tax is a direct tax on the income.

Taking your example, if the monthly turnover is INR 3,00,000- The GSt will be payable on this figure.

However, the income tax will be payable on the difference between the sale value and the cost of goods sold.

Both the taxes are applicable.

Thanks

Damini

Dear Sir,

Yes you need to pay income tax on the commission but ITR filing is annual activity. For F.Y. 2018-19, due date will be 31.07.2019.

In respect to GST as I told you earlier, you need to obtain LUT to export without GST otherwise you need to pay GST and claim refund which is not easy.

My advice is to obtain GST registration,IEC and LUT.

GST and IEC is one time registration. LUT is provided for one Financial year.

ITR filing is annual activity.

After obtaining GST registration, you need to file GST return on monthly and quarterly basis.

Hi,

GST will have to be paid on the turnover while Income tax will have to be paid on the profits that you make during the year.

GST is an indirect tax(for your business) and Income tax is direct tax ( your personal tax) and you will be liable to pay both.

Hope that clarifies.

Regards,

Nikhil

I assume that the query has been taken up by my other fellow colleagues. Feel free if any part of it has been left unattended.

Hi

1. You can do it as an individual.

2. Yes, GST is mandatory.

3. Yes, Nil returns have to be filed.

You don't require IEC.

Also, you don't need LuT as your services shall not be considered as export of services and hence, GST shall be applicable@18%.

Yes, on your commission income, you will be subject to 18% GST and also income tax in accordance with your slab rates.

It seems your query is been answered. In case of further query,plz follow up.