• Tax

Hello Sir/Madam!

Hope you're doing well. I had a query regarding the amount of tax I need to pay on the businesses that I do. One of the business is product based and the other one is service based.

Business 1 (Product based) : E-commerce 

In March 2020, I started e-commerce dropshipping business and my customer base was mainly US, UK, Australia and Canada (no Indian customers). Dropshipping means I did not hold any inventory of products. Whenever someone placed an order on my website, I used to place the same order on Aliexpress.com in China and the product used to get shipped to the customer in US or UK. 
I earned 3 lakh profit from it and then sold the website for 4 lakh.


Business 2 (Service based) : E-commerce website designing

I also make e-commerce websites for clients (again, no indian based client), mostly from the US. I earned 5 lakhs from making websites since March 2020 till date.

Conclusion : I have made 3 lakh profit from my e-commerce business + 4 lakh by selling it + 5 lakh from designing website for clients. Total money earned is 12 lakh. No product was shipped/exported from India and no customer/client was from India.

I am registered under GST as sole proprietorship under my name Rohit Jagtap. I file nil returns every month under GSTR 3B.

My questions are as follows:

1. Am I eligible to pay tax even when I have 0 Indian customers/clients?

2. If yes where can I pay tax? On the GST website or another website?

3. How much do I need to pay tax? Please let me know, you can check the earnings from the figures aforementioned.
Asked 10 days ago in Income Tax

Hi Rohit,

Thanks for writing. Let me divide the answer into two parts:

1. GST:

If your Gross Turnover is > 20 Lakhs for services and >40 Lakhs for Goods, you have to file GST returns. However, no tax will be applicable since your revenue is through 100% exports. Hence if you have filed NIL returns showing these sales in your return as Zero Rated, you have complied with this requirement

 

2. Income Tax:

You will be liable to pay income tax on the profit earned based on your slab rate. Assuming that the figures mentioned by you are net profit after deducting all expenses and there are no deductions (80C for investments, 80D for mediclaim, etc.), your tax liability will be Rs. 179400 (breakup provided below) and you will have file your income tax return on income tax E-filing website

 

 

Amount of income (Rs.)

Slab Rate

Applicable Tax (Rs.)

 

250000

0

0

 

250000

5%

12500

 

500000

20%

100000

 

200000

30%

60000

Total

1200000

 

172500

Cess

 

4%

6900

Total Tax to be paid

 

 

179400

 

Apart from this, there will be penalty for delay in advance tax payment as well which will depend upon the date on which you file your IT return. Provisions related to Advance Tax are as follows:

 

* If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and businesses

* Advance Tax Payment due dates (note that % mentioned are cumulative percentages which should be multiplied by total tax payable) :

- On or before 15th June: 15% of Advance tax

- On or before 15th September: 45% of Advance tax less tax already paid

- On or before 15th December: 75% of Advance tax less tax already paid

- On or before 15th March: 100% of Advance tax less tax already paid

* If you do not pay 90% of the tax payable before the end of the fiscal year, then the simple interest of 1% per month on Tax dues is applicable till the amount is paid

 

Regards

Yash Shah
CA, Mumbai
28 Answers

Not rated

Firstly, you cannot file NIL gst return. You dont need to pay gst but you need to provide details of your export of services in gst return. I hope you have taken LuT.

 

Coming to your questions:

1. Yes, you are required to pay income tax since you are a resident Indian.

 

2. You need to pay income tax on TIN -NSDL website and file income tax return. We can help you in paying taxes and filing return.

 

3. We need to have discussion on your expenses etc to determine the tax liability.

Lakshita Bhandari
CA, Mumbai
5160 Answers
348 Consultations

5.0 on 5.0

Hello,

 

Regarding GST, you must have submitted LUT for export without payment of GST and declared such supplies under Zero Rates supplies in your GST returns.

 

Regarding Income Tax,

1. Yes, you would be liable for income tax.

2. For income tax, the income tax's website tin-nsdl. 

3. You would be liable for income tax as per slab rates on your net income after deducting your business expenses.

I hope this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2451 Answers
8 Consultations

5.0 on 5.0

Your service is considered as export of service so you should applied for LUT otherwise you have to pay GST and then claim refund. for more clarity contact any nearest CA.

Narendra Sonagra
CA, Ahmedabad
57 Answers

Not rated

You are an Indian resident and you have earned income and hence you have to pay tax in India. Paying income tax in India has nothing to do with having indian customer.

GST is separate and Income tax is separate.

I think you must get a phone consultation to understand all this in a better manner.

I need to know the Income earned between April 2019 to march 2020 to calculate your tax.

I would strongly recommend you to book phone consultation with me so that we can calculate your tax.

As you are providing such services I doubt why are you filing Nil GST return.

 

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
3602 Answers
39 Consultations

5.0 on 5.0

Business 1 will not be liable to GST as goods have not entered India. The profit of the business and sale value less the cost of building up the business will be the income for income tax purpose.

Business 2- This will also not be liable to GST as it is covered in export service but the value is to be shown in GST returns as export of service. You should file an LUT for the export of services.  The revenue of 5 lakhs will be considered as income in Income Tax act

Ruchi Goel Anchal
CA, Gurgaon
362 Answers
2 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

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. 

 

1. Yes, a resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.

 

2.To pay taxes online, login to http://www.tin-nsdl.com > Services > e-payment : Pay Taxes Online on the tab "e-pay taxes" provided on the said website & ‘Proceed’ under Challan 280 option.

 

3.We may discuss the same over call.

 

It is advisable to take a phone consultation for detailed discussion.

 

 

Payal Chhajed
CA, Mumbai
4796 Answers
90 Consultations

5.0 on 5.0

Hi

Provision related to income tax will be applicable.

 

Please have a phone consultation for detail discussion.

Karishma Chhajer
CA, Jodhpur
2167 Answers
15 Consultations

5.0 on 5.0

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