Hello,
In whose name is the sale invoice to the end consumer generated and by whom ?
How does your internal transaction works out ?
How is the payment sorted ??
Started online pharmacy - New some information
Hi, I started a new online pharmacy recently. Got it incorporated 15 days back. I have tied up with a local retailer for my stock where he gives me the best margins. I get orders from online and the retailer processes it and I deliver them. I deliver them with his name along with mine on the invoice as invoice needs drug licence as a mandatory. I have a couple of doubts. 1. Basically, he is not selling goods to me, he is selling to my customers. I am just doing delivery service here. How can I calculate taxes here and how much? 2. He does a business of more than 20L/ annum because he is supplying me. So he has to pay GST now. Because he is not earning anything from me, how can he avoid paying tax? 3. In how many days he has to claim GST returns as all his vendors charge 12% GST on average on all the invoices made(He already has GST No). Thanks in advance.
Asked 6 years ago in GST
Hi,
1. If I understood correctly, you are acting as an intermediary here wherein you get your commission for the customer referred by you to the pharmacist. In that case, your gross income would be your commission and you will deduct expenses such as delivery expense and other marketing expenses and other exp etc.. Rest of the income will be your profit and you will have to pay tax on it.
2. He has to pay GST. He can't avoid it.
3. What do you mean by claiming GST return? He has to file gst returns periodically
Please feel free to call/ revert in case you need more clarity.
Hi
The dealer has to charge GST in the invoices. He can claim the ITC of the GST paid on his purchases.
Your profits as per income tax will be calculated as a normal business, showing all expenses.
For GST, you shall be liable to tax as an intermediary i.e. Commission income shall be taxed.
After reviewing your response to both questions and suggestions, I came to know that I am doing my processes in wrong methods. What I wanted to ask you now is, mine is a Pvt Ltd and my retailer is proprietary based. To proceed legally without any issues, I have to buy his business. Is there a way I can buy 20%(or some part) of his business. If yes, what is the process?
Asked 6 years ago
Hi
You can't buy a share in proprietorship concern.
You can enter into a partnership with that person.
Hi, Can you please tell me what does partnership mean? Is it I need to make an agreement with him or what kind of partnership? Thanks.
Asked 6 years ago
That means creation of a separate legal entity i.e. a partnership firm by preparation of partnership deed. The firm would have separate PAN and GSTN.
Hello,
Instead you can enter into an agreement with him stating that your company will handle his online business and will charge an XYZ commission or may be the profits will be shared in XYZ ratio or the profits shall be entirely yours whatever is discussed between you two.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Please let me know the ultimate objective behind this.
Why can't you simply enter into an arrangement wherby you will refer customer to the retailer and get referral commission from him?
Please feel free to call revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
Hi,
You can enter into a partnership with him, or you can for an "Association of Persons", or enter into a service agreement with him, wherein you will refer the customers to him. You will have to plan what alternative you want to choose. Further, it is advisable that you understand the taxation aspects of various alternatives available to you.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
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