• GST for online dropship

Hi Team

I am going to start online dropshipping business. Dropshipping is a special case of e commerce where seller buys through an intermediary of a merchant (not from merchant directly).

I am just the intermediary. Both Merchant and buyer are Americans. Transactions will happen in USD and I am getting some commissions due to the sale. I am not direct seller.

What are rules related to

GST
Income Tax
Any other Tax applicable
Any other step I need to do?
Asked 5 months ago in GST

In case of Intermediary services

Under GST, You would be liable to pay GST@18% (CGST+SGST) on commission income. Under Income tax, you can show the commission income as income from other sources or Profits & Gains from business. Pay advance tax to avoid loss of interest.

 

As you have mentioned that seller will purchase from you. It seems that you will supply goods on your own account. In such a scenario you will not fall under the definition of intermediary.

 

 

For detailed discussion you may opt for phone consultation

 

 

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

Hi

 

in the given case actually its purchase and sales transaction recorded in your account by nature of drop shipping business and your net margin is treated as your income

 

So in that case

 

GST - Not applicable since you have all transaction happening outside India

Income Tax - Applicable on next profit

 

If you are looking for complete compliance solution can help with the same

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
39 Consultations

5.0 on 5.0

Business Model

As the dropshipper-intermediary:

- Transactions actually happen in your books - purchase from merchant and sale to overseas buyer
- You handle remittances and payments in foreign currency
- You earn a margin/commission on facilitating this transaction

GST

- Trade/commerce is happening outside India.
- As such, GST registration not be required in India as per place of supply rules.

Income Tax

- The margin/commission you earn would be considered your business income
- You can declare this income under Profits and Gains from Business/Profession
- Advance Tax needs to be paid if estimated tax liability exceeds Rs 10,000
- Maintain books of accounts to record transactions and income

Other Compliance

- Obtain Import Export Code (IEC)
- Maintain records of foreign inward remittances in your bank

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

 

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
212 Answers
4 Consultations

5.0 on 5.0

If you are going to work from India and you will receive income in India then income tax will be applicable.

 

For now GST is questionable, for now there is no GST on such transaction.

 

There might be tax on such in foreign country depending on in which country are you working.

 

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

Thank you

Naman Maloo
CA, Jaipur
4272 Answers
97 Consultations

5.0 on 5.0

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