GST Applicable or not & if yes How

[Ramesh Sah]

We have a proprietorship in name of Nepalekart, We basically sales recharge which is delivered as topup in Nepal but the money is collected from Indian person. As there are many Nepalese working in India but their family stays in Nepal so they go to our website & place a order of recharge through www.nepalekart.com. Since the topup is delivered in Nepal's so wanna ask whether we are liable to pay GST or not If yes then under which section & how we are taxable.

Money is collected through payumoney ie our payment gateway & the same is sent to Nepal through Bank ie swift is done to vendor in Nepal & the same money is deposited in our agent login as wallet balance in Nepal & the same wallet balance is used by customer here in India to pay & topup their nepali prepaid postpaid mobile number

[CA Seshukumar]

Little ambiguity....

Can you call me....9742873779

[KASTURI SETHI]

Dear Querist,

Will you elaborate relationship between you and agent ? Is there any agreement executed between you and agent ? Does your agent play the role of 'intermediary' ? Before replying read the meaning and definition of 'intermediary' in GST

[Ramesh Sah]

We have an Agreement with Paypoint Nepal Private limited company of Nepal that they will send them funds in their Bank account for which they issue us credit limit in wallet.. Suppose we sent them 1 lacs the same is converted to Nepalese rupee ie 1,60,000 & they give credit for 1.6 lacs & our customer recharges their relatives number from India paying us on website. The ultimate delivery of Recharge is in Nepal's mobile topup but since we are giving service from India & collecting Indian Currency & sending funds through Kotak Bank to Nepal ie Paypoint Nepal Private Limited. What will be GST impact on us..

We sales NPR 100 Recharge at INR 73

Sales 73/-

Cost charge by Nepal's company 62.5/-

Payment Gateway Payumoney Indian Company charges( 2%+18% gst of 2%) 1.73

Amount Settled in our Kotak Bank (73-1.73) 71.27/-

Out of Which our Cost is 62.5 ie charged by Paypoint Nepal .

profit on transaction 8.77 INR

[KASTURI SETHI]

What is the billing address of the buyer/recipient ? Whether in India or out side India ?

[Ramesh Sah]

We just issue a notification to user by email in which billing address is not mentioned

Hi [email protected],

Recharge Successfully Done

 

Transaction Type:	Payumoney
Processing Fees INR	33.156
Indian Number:	9821884963
Service Operator:	NCell
Number:	9810659516
Payment Id :	238663097
Transaction Date:	2019-03-30 13:42:28
TransactionAmount(INR):	290
Amount recharged For(in NPR):	400

 

 User pays from India so their address in profile is of India but recharge is delivered to Nepal for which we collect some processing fees as our service charge.   

[KASTURI SETHI]

In my view, you are covered under Section 12 (11) (d) of IGST Act, 2017 and GST is applicable. It cannot be treated as export of services as both (supplier) and (Recipient) are located in India. Views of other experts on this forum are also welcome.

[Ramesh Sah]

Ok if GST is applicable then on which amount processing fees collection against service or total amount collected from user.

We collect very low amount from which against such services which is approx to 4-5% & if GST is applicable on total amount then after GST the amount will be very high that no one can buy the recharge from India.

As we contacted some of the CA they said that we are selling recharge to Nepal using API from Nepal server only since neither the recharge is imported or exported we are just making a channel ie connection between user to pay such amount from India & collection money on Behalf as intermediary against which service charge is collected so we have to pay GST @18% on service charge collected as processing fees

Please comment your view as recharge is just done from Nepal's company server to Nepal we just collect money using Indian Payment gateway & charges small amount as processing fees

[KASTURI SETHI]

Dear Querist, You have deviated from the original query. With this scenario is changed.

[Ramesh Sah]

Please reply me that on which amount GST is applicable on processing fees or on amount we collect from customer..

[KASTURI SETHI]

As per SECTION 2 of IGST Act, 2017

(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.

If you think you fall in the definition of intermediary as per above definition, GST will be paid on the amount of commission i.e. processing charges only.

 

[KASTURI SETHI]

Dear Querist,

After re-examination of your reply dated 30.3.2019 at serial no.7 above, I am of the view that your activity conform to the definition of 'Intermediary services' as provided under Section 2(13) of IGST Act, 2017. Thus you are covered under Section 13(8)(b) of IGST Act, 2017 and place of supply is in India. Hence it cannot be treated as export of service. You are required to pay GST on the amount of processing fee and not on the whole amount.

 

[Ramesh Sah]

Thanks alot sir 😃 for your valuable reply..

AI Summary

Intermediary services: GST applies on the processing fee where the place of supply is in India.
The proprietor's activity constitutes intermediary services arranging recharge through a Nepali provider; the place of supply is in India and the supply is not an export. GST applies on the proprietor's service consideration, so tax is payable on the processing fee/commission retained by the intermediary, not on the total amount collected for the recharge.