I have my business registered in India and I also dropship. I have got a valid GST and IE code, my business is MSME with Sole proprietorship. This is required to set up with any payment provider you want to use with your store.
My stores default currency is USD. I use PayPal express checkout (Although I regret it now since the fees is the highest around 4.4% + 0.3USD each transaction apart from 2% transaction fees of Shopify not to mention the frequent exploits the customers use to raise paypal cases) and I use Stripe with International payments enabled (This is the best so far with only 2.9% + 0.3USD fees and no disputes or problems so far)
Recently I was able to open an account with PayU money and enabled USD payments I am yet to try it on my store.
All you need is a valid GST registration and IE code registration it is very easy to do. Also if possible get LUT certificate as it helps to get the GST you pay to the payment processors as well as FB and Google ads back to your bank.
I spent around 5000000INR on FB ads and paid 900000INR GST tax which I was only able to get back because of LUT.
Hope this helps
I appreciate your sharing this information. This surely helps a lot!
My store is relatively new, just over six months, and I'm finding it pretty hard doing business without an international credit card payment provider. My store isn't registered yet. Also, there is a lack of information as to the requirements for payment providers in the market.
I have some queries regarding the information you have shared.
My sellers and customers are both in the US, and the store's default currency is USD. Do I still need a GST registration as I'm not exporting from India?
I would appreciate it if you could please share the links for GST and IE code registration.
Also, do we need to consult a local accountant for business registration or through some portal?
I had a merchant account with PayU Money, but it was an individual one. They rejected my application for international payments saying that they don't support the dropshipping model. They didn't inform me that I need to have my business registered.
I'm a newbie in online business, so please forgive my barrage of questions. I'm still searching for many unanswered questions. I thought business registration could be done after we start getting good revenue.
GST registration per say is not mandatory. But there are advantages of having GST registration. First of all your business looks legitimate so you can get registration easily done with any of the payment provider. Secondly when you use Facebook ads, Google etc for marketing, they will charge 18% GST which can become a cost for you if you don't get it refunded. Payment providers also charge 18% GST on the fees. So it's better to get the registration done as later you can claim the GST which you have paid to all of these service providers.
You need a company formed for getting GST registration done. I got it done online you can send me your email address and phone number I will send you the link. The process takes around a week. After registration you can open a Startup business account with ICICI or any other bank, the advantage you will get is that there is no minimum balance to be maintained for the initial 6 months. Plus you can get a business credit card with a very high limit.
Once the GST registration is done you will need to file GST every month. All the GST you have paid to the service providers will be collected on the Electronic GST ledger. You will also need to file your sales under 0 rated tax structure using LUT certificate. The people I got registration done helped me with all of this, and the end of every month I just send them all the invoices and they do the necessary.
I would suggest you to not go for PayPal as there are a lot of issues with it. So far my experience with Stripe is the best. For claiming GST refund you need to declare your business income under 0 rated tax, because you are selling to customers outside India in a foreign currency which is USD. And for declaring sales under 0 rated tax you need to show the proof like BRC or FIRC certificate. Stripe sends those free of charge every day directly to the email. But for paypal its a big headache. You need to send an application to CITI bank to prepare the FIRC certificate and send them to your bank. For this you will need to pay paypal 100INR + 18% tax for each transaction. It takes around 20 days for them to courier the certificates to the bank then you need to go the bank and collect it. Its not very convenient . Plus the fees of paypal is the highest around 4.4% + 0.3USD for each transaction not to mention the 2% transaction fees of shopify. While for stripe it is around 2.9% + 0.3USD same is for PayU.
Apart from that yes none of the payment provider in India supports dropshipping except for 2checkout and the issue with 2checkout is that you need to show them atleast 6 months of records with other payment provider. Its better not to mention to them that you are dropshipping on the contrary just register as a normal Indian business then once approved apply for international payments with IE code certificate and TDS certificate all which can be easily done online.
I appreciate your sharing this vital information! I've been searching forums and knowledge bases for months now.
I know that after company registration as a sole proprietor, we need to open a current bank account in the company's name. Yes, GST registration is optional. But as you say, it gives the business leverage and makes it legitimate.
Though Stripe is available in India, it's not integrated with Shopify here. How are you able to use it for international payments?
The payment providers ask the business type during account registration. If not dropshipping or online retail, what type of business do we register as?
In your post day before yesterday, you mentioned your business is a registered MSME, and you have a valid GST and IE code.
I have my business registered in India and I also dropship. I have got a valid GST and IE code, my business is MSME with Sole proprietorship. This is required to set up with any payment provider you want to use with your store. This is required to set up with any payment provider you want to use with your store.
I have a small query. I would appreciate it if you can clear the doubt. Why is an IE code required if I'm not exporting or importing anything from here? If both customer and supplier are outside the country, then what is the necessity of an IE code?
@drtalha I'm making my store right now and my default currency is going to be USD too. It's a Print on Demand store, so not exactly drop shipping. Will Stripe give me a payment gateway without GST and company registration?
Also, could you please help me out in GST registration and IE code registration?