• Export of services through PayPal and GST return

I do blogging targeting the US market. Consider a scenario where I raise an invoice to a US client for advertising for $1000 through PayPal. Due to PayPal fees for transfer between accounts, I only receive $947.73 in my PayPal account. Then there is the USD-INR withdrawal charges on the top of that. In the end, the FIRC that PayPal provides me shows $912.18 as the dollar value along with an exchange rate of the day of receiving money in my Indian bank account.

Also, the client name in the FIRC provided by PayPal says PAYPAL PTE LTD,SINGAPORE, not the name of the actual client. 

How should I raise the invoice for GST purposes? What amount to show in the GST invoice?

Also, what amount to show for income tax purpose? Shouldn't both GST and Income tax invoice be the same? Is there any workaround for this scenario?

P.S - I have an LUT since these are exports of services. 

Thank you.
Asked 20 days ago in GST

Your invoice for GST Purpose should be for $1000/- (Than charges and foreign currency conversion cost to the extent of $87.82/-) and net income offered for tax as $ 912.18/-

 

 

Vishrut Rajesh Shah
CA, Ahmedabad
804 Answers
30 Consultations

5.0 on 5.0

Dear Sir/Madam,

 

In reference to your query, you are required to raise Invoice for GST Purposes, and the value would be the gross amount charged i.e. $1,000. However since you have an LUT, you are not required to discharge any tax on the same.

 

The amount to be shown for IT purposes would also be the same, i.e. $1,000.

The deduction made of $87.82 can be claimed as expenses by way of commission charges by Paypal and Forex conversion charges.

 

Please advise in case of any further clarification.

 

Thanks & Regards,

CA Aditya Dhanuka.

https://www.linkedin.com/in/aditya-dhanuka-69824451/

Aditya Dhanuka
CA, Kolkata
56 Answers
2 Consultations

5.0 on 5.0

Hi,

I suggest you to raise invoice as and when amount is received by you. You can either generate invoice in INR or both INR & USD. (INR is mandatory).

Since you have LUT you wont have to pay GST but you have to file your returns and disclose it in your GST return.

For doubts or detailed discussion I suggest you take consultation, I can guide you through the process.

Hope this was helpful

Regards

Altamush Zafar
CA, Kanpur
33 Answers

5.0 on 5.0

You will create a Tax Invoice. In my opinion, the GST invoice should be raised by 1000$. You will not be charging any GST on your invoice because you have filed LUT with the GST department. 

Under Income Tax, you will show your business turnover as $1000 and claim the differential amount of 1000-912.18 = 87.8$ as a business expense. There will be no difference between your GST turnover and Income Tax turnover. 

You can also claim other business-related expenses while filing your Income Tax Return. 

Puja Sharma
CA, Jaipur
33 Answers

Not rated

Invoice will be raise for $1000 to the client. Rest will be foreign exchange gain/ loss. Income for Income tax and GST purpose will be same.

Ruchi Goel Anchal
CA, Gurgaon
501 Answers
10 Consultations

5.0 on 5.0

Where paypal is invoicing you the amount and charging GST the ITC of which is also visible to you in your GSTR-2B then you claim ITC on it. Moreover if any other charges are being deducted by any foreign party for their services the same will be classified as import of service and you will have to pay RCM on such services and claim ITC on it.

 

Altamush Zafar
CA, Kanpur
33 Answers

5.0 on 5.0

- Turnover would be $1000 for both Income tax and GST.

- There are two main issues. Firstly FIRC is having remitter name PAYPAL PTE SINGAPORE and the amount of remittance in FIRC is less than $1000 which does not reconcile with the invoices and can attract litigation and you may end up in paying GST on entire amount of $1000. Check with Paypal team for clarification on both the above points. If required change the payment gateway or take direct credit into your current account.

 

For detailed discussion, you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4432 Answers
550 Consultations

5.0 on 5.0

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