Exporting to USA directly from China using Aliexpress

Exporting to USA directly from China using Aliexpress

I runa small web dev firm. Plan to sell an online course(ebooks/videos) to USA customers. I am told it will come under export of service.

I also intend to bundle a physical product with my online course. The physical product will be directly shipped from Aliexpress.com to the USA customer. It never enters India.

Details:
1. Payment will be collected from USA customer for my online course. (example $97)

2. I deliver the course details online and tell the customer the physical product is on the way.

3. I will then order a $8 physical product from aliexpress.com and ask them to directly ship it to the US customer who bought my course.

4. Invoice will be from me to my US customer which mentions the physical product as bonus!

My questions:
1. Will my overall offer then be under export of services?

2. Will the physical product be classified as export ? Will I have to pay GST for the physical product.

3. Payments from US customers are set-up to be collected by Stripe which is a card payment processor. Stripe will give report of all foreign customers every month but the final payout to my bank will be in INR, not foreign currency. Will this affect the criteria for export?

Asked 5 years ago in GST

Hello,

Yes, the whole supply of online courses with physical products will be covered under Export of Sevices.

1. Yes.

2. Yes. For Aliexpress it would be a "bill to ship to" supply. You will have to charge GST on the transaction value of the supply of service including physical product.

3. As per CBIC Circular No. 88/07/2019-GST dated 01.02.2019, your supply will be covered under Export of Services. and therefore eligible for LUT or refund of IGST option available for export supplies.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hunny Badlani

CA, Madhya Pradesh

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@Hunny Badlani
Thank you for the reply. I have not understood point #2. To my layman eyes there appears to be a contradiction(?)
My service(ebooks/video course) is covered under export of service you say, and yet you say I have to pay GST on the sale of the course?? 

Are you saying I will have to pay GST for the $97 online course which would normally be zero rated, just because I am including a $8 physical product I am bundling as bonus? Could you please clarify?

Asked 5 years ago

Regarding point #2,

For Export supplies, two options are available either You can get LUT and supply without IGST or you can supply with IGST and later claim a refund of the tax paid.

Adding $8 physical product to the whole online course transaction won't affect its taxability it would still be export supply i.e. zero-rated supply.

I said in reply to point #2 to charge GST on the transaction value($97) of the supply including physical product. GST would be paid if you choose the second option of supply with IGST.

Hunny Badlani

CA, Madhya Pradesh

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Thanks for the kind replies. I need some more clarification.

1. If I already have LUT, No tax as it's zero rated, correct?
2.. while filing returns, under zero rated, do I show this(course plus bonus physical product) as service or goods or do I have to breakup? If I don't charge the customer for the physical product and offer it only as bonus to the course, then what happens?
3. Do I need to pay reverse charge while paying for the $8 physical product on AliExpress?

Asked 5 years ago

1. Yes. No IGST if LUT availed.

2. Either case, you will have to show it as a supply of service and not as a break up of goods and services.

3. No. RCM is charged on purchases from unregistered dealers only on specific goods or services. You can get the list of these specific goods and services online.

Hunny Badlani

CA, Madhya Pradesh

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Talk to Hunny Badlani

I think I have a clearer picture now. This discussion has been so worth it.

I have a question unrelated to the above scenario.

I subscribe to a website service from a foreign provider located in UK. I pay monthly for using the said website. Do I have to pay reverse charge under import of service? Keep in mind we are a 100% we export firm and don't have anything to offset input credit.

Asked 5 years ago

1. No.

2. No, no

3. No, provided you get a foreign inward remittance certificate.

Lakshita Bhandari

CA, Mumbai

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There would be no GST payable on such outward supplies - neither on course nor on product.

Lakshita Bhandari

CA, Mumbai

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The product sale is an out and out supply covered under schedule III of CGST act. It is not a supply at all.

We may discuss the issues further.

Lakshita Bhandari

CA, Mumbai

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Yes, RCM shall be applicable on import of services. You can claim it's ITC and get refund later.

Lakshita Bhandari

CA, Mumbai

5687 Answers

942 Consultations

Talk to Lakshita Bhandari

Your delivery of service to USA customer would be export of service and if you have LUT you dont have to pay any GST.

No GST would be chargeable on the goods you are providing as bonus.

No reverse charge on such goods.

If you are subscribing to a website service and subscribing to their database and that is being used for your business then technically you must pay GST under reverse charge even though you are doing 100% export service.

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

Thank you.