• Tax on dropshipping when dropshipping to India

Hi,

I plan to start a dropshipping business where I will source products from my suppliers outside India and sell them on my own ecommerce portal to Indian customers.The modus operandi will be as below:

1. I list items from selected suppliers on my ecommerce store
2. Customer buys listed item(s) on the ecommerce store
3. I place an order with supplier for the item
4. Supplier ships the item directly to customer

I know for step 2 I have to pay GST and/also TDS, but not aware for step 3 and step 4 what are the provisions?

Pls advise
Asked 5 years ago in GST

- You need to register for GST once your turnover exceeds Rs.20 lacs as you will place order on your own account.

 

- No TDS to be deducted.

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

Hi

There are generally two models under dropshipping. Please let us know how invoicing is done for apt taxation advice. Will the foreign supplier issue an invoice to you or directly to the customer? Is your customer base only in India?

Lakshita Bhandari
CA, Mumbai
5687 Answers
913 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

Please share the following details for appropriate answer:

 

1. How the invoicing is done? From the dealer and to the ultimate customer.

2. How are you receiving and making the payments? Is it in foreign exchange?

3.What's your customer base? Is it only outside in India or outside India too?

 

Generally in drop shipping, GST is chargeable on profit element I.e. commission income.

 

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5188 Answers
291 Consultations

5.0 on 5.0

Your registration will be done as e-commerce operator. As Per Sec. 2(45) of the CGST Act, 2017 E-commerce operator means any person who owns, operates or Manages digital or electronic facility or platform for electronic commerce. Any Person who is supplying Goods/Services on his account, however would not be considered as E-commerce operator.

 

All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakhs.

 

TDS is to be deducted at the rate of 1% on the payments made to the suppliers of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs. 2,50,000.

 

  • Any person who is required to deduct TDS will electronically submit an application for registration, duly signed or verified through EVC (electronic verification code), using the FORM GSTREG-07 on the Common Portal; either directly or from a Facilitation Centre notified by the Commissioner. The proper officer will grant registration after verification and issue a certificate of registration in FORM GST REG-06 within 3 working days from the date of submission of application.

 

A. For supply of goods to USA- No GST

 

B. For supply of goods to India- covered under taxable goods. GST charged and TDS to be deducted

Ajit Kumar Jain
CA, Mumbai
26 Answers

5.0 on 5.0

Hi

 

Generally in dropshipping ,GST is charged on commission only.

 

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

You need to pay GST on the difference amount i.e. your commission or profit by whatever name you earn it and no requirement of TDS, on what are you going to pay TDS?

On commission? Since the people would be buying goods for personal use no TDS required to be deducted.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
4280 Answers
98 Consultations

5.0 on 5.0

Since you are importing the goods into India, therefore, you will need to comply with custom provisions for this. Bill of entry needs to be filed for clearance of the goods. For this DDP method is adopted generally i.e. Direct duty paid under the courier bill of entry method.

Under step 3 there is no compliance requirement. However, under Step 4 you need to take care of Custom provisions.

 

Trust you find above helpful.

 

Thanks.

 

 

Brijendra Tripathi
CA, Lucknow
143 Answers
3 Consultations

5.0 on 5.0

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