GST charge

Dear Sir,

Hope you are doing well !

How much are your turnover/ annual gross receipts?

GST registration is mandatory only if your turnover in a financial year exceeds Rs 20 lakhs

Hi,

- In case of dropshipping there is no need to maintain inventory. Are you working on commission basis or an outright basis?. If you are working as intermediary then you need to obtain GST registration compulsorily otherwise there is a limit of Rs. 40 lacs. In your case, limit is Rs 20 lacs as you are residing in special category state i.e UT. 

- GST rate depends on the nature of the product.In case of intra-state sale, CGST and SGST is applicable and in case of inter-state sale, IGST is applicable.

Thanks

Hello Sir,

GST is a tax based on destination and each person will need to pay GST on any goods and services consumed. This means that the tax will be received by the state in which the goods and services and consumed, not by the state in which the goods are manufactured.

To understand how GST is applicable, it is important to know if the transaction is an Intra State or an Inter-State supply.

If a client is in the same state as the supplier GST will be paid as:

• CGST (central GST) that will be collected by the center

• SGST (state GST), that will be collected by the state.

*It’s important to mention here that CGST and SGST will be treated as separate entities and will be taxed separately on your invoice.

If the client is located in a different state, then GST will be paid as:

• IGST (integrated GST), that will be collected by the centre from the buying state.

Intermediary generally charge commission against the services provided by them. The commission income so earned is subjected to GST@18% and all the provisions of GST law is applicable accordingly.

You need to register under GST mandatorily irrespective of the turnover.

The commission would be essentially the profit element. This would be the GST tax liability and no refund can be claimed back.

Hello Sir,

It would be considered as inter-state supply.

GST will be paid as IGST (integrated GST) i.e. IGST@18 % on commission income.

If it is a pure commission amount then you need to pay GST@18%.

If you are doing it on commission basis then you need to charge 18% GST and if you are doing it on your own then GST rate would depend on value of goods and also if you are selling the goods out of india then it will be export of Goods.

Since most of dropshipping is out of india you need to charge IGST. If the sale is within same state of your registration then only you need to charge CGST and SGST.

If you working on pure commission basis then you only need to pay GST on your commission income earned.

If you are an intermediary GST registration would be compulsory for you.

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

Thank you.

Hi,

A lot of it depends upon the invoicing methodology. Please let us know how invoicing works in your case.

Whether China supplier raise invoice in you?

Whether you raise invoice on final customer?

Hello,

If you are doing it on a commission basis as an intermediary, then you would be required to charge GST @18% on your commission amount.

Otherwise, if you are making sales on your own and earning sales income(we will have to check the invoice for it) then the rate would depend upon the product you are selling.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

In any case, IGST would be charged as it would be regarded as interstate supply.