• Regarding GST & import tax for an imported product

Hi, am going to start a business model in which I'll be having an E-commerce site with imported products around the world. Customers order a product from my site. I'll speak with the suppliers in the world and tell them to send the product directly to my customer. Its B2C model. Here should i collect gst from customer ? And should i also pay gst when I pay to the supplier. And should i have to pay import tax for that product. Say if am buying from China, there won't be any invoice that comes with the parcel. It will be mentioned as gift package and it will have recipient address plus price in dollars. Kindly clarify me on this.
Asked 5 months ago in GST from Chennai, Tamil Nadu
Hi

Where is the customer base? Will it be in India?
Lakshita Bhandari
CA, Mumbai
1478 Answers
40 Consultations

5.0 on 5.0

First of all, there is no GST applicability till your turnover reaches Rs. 20 lacs.

Thereafter, your profit element shall be taxed as commission income and GST @18% shall be applicable. Since it's a drop shipping business and not a traditional purchase sale business, only commission is taxable; goods are shipped directly.

As far as custom duty is concerned, it shall have to be paid, not by you but by the customer. There's a mechanism of collection of custom duties by the courier agency through which the goods are shipped.
Lakshita Bhandari
CA, Mumbai
1478 Answers
40 Consultations

5.0 on 5.0

On a alternative view, you may not tax your income as commission. In that case, you will have to pay GST in reverse charge on purchases and claim ITC of such GST paid while loading GST charged on sales. The rate of GST shall be according to the products that you supply.
Lakshita Bhandari
CA, Mumbai
1478 Answers
40 Consultations

5.0 on 5.0

Commission means your sale price minus purchase price. GST will be levied on such commission amount.

No GST requirement if turnover is 1 lac.

You can do such business through sole proprietorship, no need for registration.

You don't need to apply for GST registration till your annual turnover is within 20 lacs.

You need to pay only income tax; no GST; custom duty will be paid by buyer ( No custom duty if it is a gift package upto Rs. 10000).
Lakshita Bhandari
CA, Mumbai
1478 Answers
40 Consultations

5.0 on 5.0

Hi,

Your profit will be treated as commission and you will have have to pay GST on your commission income if it exceeds 20lacs per annum.

However, if supplier invoices you, then it will be your purchase and sale and you need to charge GST on sale amount also need to pay GST on purchase amount in reverse charge.
Abhishek Dugar
CA, Mumbai
2942 Answers
125 Consultations

5.0 on 5.0

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