I will be starting my Shopify store soon. I am an Indian citizen. I have my proprietorship, my GST number with me, all registered in India. I would be drop-shipping from Chinese suppliers all the way to USA. My CA told me that we have to enter our GST number in our ecommerce website settings as well. Is the same thing followed in Shopify drop-shipping as well, because my accountant has not dealt with drop-shipping business. This whole drop-shipping model is not known to many in India. Please reply ASAP
Nick here from Shopify. good question!
The same concept would follow for dropshipping within Shopify. In terms of how it looks on the legal side of things, it would be the same. The main difference with dropshipping is how you source and fulfill your products more than anything. You would still be running and conducting your business from within India under Indian laws and regulations.
Shopify has a helpful guide on everything to do with GST in India which I think you might find valuable. It discusses the difference between GST, CGST, and SGST as well as who GST is mandatory for which you can see in the screenshot below:
You can read the helpful guide Shopify made for this from the link here.
Hopefully, this helps and answers your question.
All the best, Nick
Thanks for the prompt reply. I discussed with my accountant regarding this, and turns out that I dont need to pay any GST for now as GST council has not devised any plan for dropshipping business which is neither importing or exporting to India. On that we just have to pay the income tax on our profits. However, the thing is that as I have already taken a GST number- which btw is required for running fb and google ads; I would still have to file the GST.
But in all this scenario would I still have to integrate my GST number to the shopify store ?
Whether or not you set up and integrate your GST into your Shopify store is completely up to you. If you have spoken to your accountant as well as see the list above of when it might all be mandatory and still don't feel it's necessary to integrate it then you don't need to if you don't want to add it.
If you are selling your products through eCommerce portal then GST registration is compulsory. Thus, the threshold Turnover limit for GST Registration is Rs. 40 lakh for a supplier of Goods. However, this limit is Rs. 20 lakh for the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand.
Thus, as soon the supplier of goods crosses the above limit he needs to take GST registration and pay the regular tax. Also, he needs to file all GST returns as per the current law. you may read more about GST registration limit at www.gstindianews.info website.
I am new to dropshipping, from India.
Could you please answer my questions with yes or no?
1. Do we need to register a Company in India for this business (consumers in US & Manufacturers in China) ?
2. Do we need a GSTIN no, to accept international payments in paypal?
3. If we not provide a GSTIN no in paypal will there be any kind of tax deductions?
I'm not 100% sure of the laws in India, but I would strongly suggest registering your company for legal reasons. I would reach out to a professional accountant in your local area or a local tax office to find out more about this.
Regarding needing a GSTIN number to accept international payments in PayPal, I would reach out to PayPal directly about this. PayPal would know better than anyone about what's needed to accept payments for their own platform. You can reach out to the PayPal support team directly from the link here.
I'm not sure if I'm late with this answer but hopefully it might be of atleast some help to someone.
So, basically, when you are getting into a Dropshipping business with a Chinese supplier & selling the products in USA, this does NOT come under the definition of Indian GST law.
GST would be applicable ONLY when the goods/services are originating in India or entering India & then being shipped again.
In this scenario, nothing of this sort is happening in India. However, the payments you receive would definitely be liable to Income Tax, as per your income slab.
Now coming down to your specific questions:
1. Company registration (Pvt Ltd/LLP) is NOT mandatory for this. You can go ahead & carry out operations as a Proprietorship firm or a Partnership firm as well. It depends solely on your choice with respect to the features & liabilities of each type of company/firm registration.
2. Like stated above, GSTIN is NOT mandatory for the type of business you have mentioned. It would have been mandatory had you wanted to do an ecommerce business in India. In that scenario, ecommerce being interstate business transactions by it's nature, GST would be mandatory irrespective of the turnover.
3. Paypal would deduct it's standard fees from you & add an 18% GST on this. If you have a GST number, you can submit that to Paypal & claim input for this GST paid to paypal. Without GST registration, you cannot claim this as input. So, basically, No difference with or without GST except input claim.
I hope I was able to make things atleast a bit clearer for folks confused with this aspect of dropshipping. Even though I have tried to explain everything to the best of my knowledge, I strongly suggest that you should discuss your business/dropshipping basics & my above points with your CA or accountant for clarification.
Please do note, most of our experienced Indian CAs & Accountants are not very much familiar with ECommerce businesses & not at all familiar with dropshipping concepts. So explain in as simple terms as you can so they can guide you properly.
Thanks a lot Abhishek. You were of great help. You have answered things which none of the people I consulted know about.
I have already registered as Proprietorship and has taken my GSTIN number. I still have one query for you.
Now, as per your advice I need not declare my monthly GSTIN returns, all I need to do is file my income tax once, in the month of March-April.
Am I correct?
Also I just wanted to know if you are CA person? Also the source of the information you have provided me, Just for my reference and to help the CA guys (whom I have already consulted), to mention such a clause exist in the dropshipping business.
Once again Thanks Abhishek.
I'm facing the same issue. Unfortunately, we can't set up Shopify PayPal Payments without GST number. I can't even get gst number because I don't have a business/company yet:(
There are options such as Tax Payer, Tax deductor, gst practitioner, non-resident taxable person, other identified person, united nations body. All of these don't apply.
Let me know if there's any other solution.
Hi guys. I am also bit confused regarding the gst concept in shopify and the guide is also not clear.
I do have a registered firm and gst number as I operates in flipkart and amazon. Though I ship my products from Delhi only and my gst number is also of Delhi.
But In shopify, I have supplier of different states, say Gujarat, and that would be delivering product to other states in India itself. Its dropshipping in a way within India.
So how would that work. As far as I am aware, I can only ship products from my registered gst number state. If anyone is aware about such situation. Please guide.
Also to the previous question, you don't need to own a company for gst number. You can register for gst as a sole proprietor as well.
Great questions! As @Akki18 mentions, it could be worth looking a sole propertier to see if that could work for you? The only way for this would be to have a GST number and go that route.
@Akki18, this is something I would look into and ask your local tax office/accountant or legal professional. I am not 100% on the laws of shipping between states within India, so can't comment or say anything for certain. It would definitely be best to ask a professional in your locality who would be more familiar with the business laws.
Hey! You can easily setup PayPal without a GST number. We have done that. Contact PayPal support if you are facing any problem.
i am about to start my drop shipping business using shopify.
Just want to know that if there is a need to register for a gst number for my business and for running Facebook and google ads.
And also what formalities were required for opening business account with a bank