Your invoice for GST Purpose should be for $1000/- (Than charges and foreign currency conversion cost to the extent of $87.82/-) and net income offered for tax as $ 912.18/-
Export of services through PayPal and GST return
I do blogging targeting the US market. Consider a scenario where I raise an invoice to a US client for advertising for $1000 through PayPal. Due to PayPal fees for transfer between accounts, I only receive $947.73 in my PayPal account. Then there is the USD-INR withdrawal charges on the top of that. In the end, the FIRC that PayPal provides me shows $912.18 as the dollar value along with an exchange rate of the day of receiving money in my Indian bank account. Also, the client name in the FIRC provided by PayPal says PAYPAL PTE LTD,SINGAPORE, not the name of the actual client. How should I raise the invoice for GST purposes? What amount to show in the GST invoice? Also, what amount to show for income tax purpose? Shouldn't both GST and Income tax invoice be the same? Is there any workaround for this scenario? P.S - I have an LUT since these are exports of services. Thank you.
Asked 2 years ago in GST
Dear Sir/Madam,
In reference to your query, you are required to raise Invoice for GST Purposes, and the value would be the gross amount charged i.e. $1,000. However since you have an LUT, you are not required to discharge any tax on the same.
The amount to be shown for IT purposes would also be the same, i.e. $1,000.
The deduction made of $87.82 can be claimed as expenses by way of commission charges by Paypal and Forex conversion charges.
Please advise in case of any further clarification.
Thanks & Regards,
CA Aditya Dhanuka.
Hi,
I suggest you to raise invoice as and when amount is received by you. You can either generate invoice in INR or both INR & USD. (INR is mandatory).
Since you have LUT you wont have to pay GST but you have to file your returns and disclose it in your GST return.
For doubts or detailed discussion I suggest you take consultation, I can guide you through the process.
Hope this was helpful
Regards
You will create a Tax Invoice. In my opinion, the GST invoice should be raised by 1000$. You will not be charging any GST on your invoice because you have filed LUT with the GST department.
Under Income Tax, you will show your business turnover as $1000 and claim the differential amount of 1000-912.18 = 87.8$ as a business expense. There will be no difference between your GST turnover and Income Tax turnover.
You can also claim other business-related expenses while filing your Income Tax Return.
Invoice will be raise for $1000 to the client. Rest will be foreign exchange gain/ loss. Income for Income tax and GST purpose will be same.
Thank you! I understand the stand of showing $1000 in GST and ITR. ITR is not an issue since we can easily claim expense and not pay tax on it. In the case of GST, suppose the USD rate is 75, then as per everyone's opinion, I'd need to file a GST return with nil tax and 75000 INR in invoice. But the FIRC I have, which is the proof that I've received foreign currency which puts me in the 0% GST category, will only have an amount of 68400 INR which is the equivalent of $912. So, there is a difference of 6600 Rs which is the PayPal charges+conversion fees. PayPal actually does provide a GST invoice for that much amount, 18% of which will be available to me as ITC. So, what should I do to make all these calculations perfect? Should I somehow pay GST for 6600 Rs from my end since I didn't get paid that money in USD, but instead PayPal took it and didn't include it in FIRC? If I do that, I can claim it back since PayPal reports that with my GSTIN. Is that route plausible? Is there any TDS implication in all of these? I'd need to upload the FIRCs since there are other invoices that I pay in RCM. So I need to get this right.
Asked 2 years ago
Where paypal is invoicing you the amount and charging GST the ITC of which is also visible to you in your GSTR-2B then you claim ITC on it. Moreover if any other charges are being deducted by any foreign party for their services the same will be classified as import of service and you will have to pay RCM on such services and claim ITC on it.
- Turnover would be $1000 for both Income tax and GST.
- There are two main issues. Firstly FIRC is having remitter name PAYPAL PTE SINGAPORE and the amount of remittance in FIRC is less than $1000 which does not reconcile with the invoices and can attract litigation and you may end up in paying GST on entire amount of $1000. Check with Paypal team for clarification on both the above points. If required change the payment gateway or take direct credit into your current account.
For detailed discussion, you may opt for phone consultation.
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