Tax implication

[Narayanan Jagadeesan]

Dear Team

We source and supply goods from India (registered as Pvt Ltd company) to our principal registered in USA, who in turn will market / sell goods to various countries , working as their Franchise.

The principal buyer US , need invoice to be raised to seller at various countries directly with margin amount to seller end as indicated by principal to various countries and the profit or less will be shared according to % agreed between partners in India.

How do we raise invoice to buyer at abroad and when payment received how to account at our country India. A sample illustration is given below.

Cost at India say, ₹ 50000/=

Bill to abroad clients as advised by Principal at USA : ₹ 57,500/=(15% margin)

When payment received , the profit is 7,500/= and this will be shared amongst partners

in India , as per agreement.

Kindly enlighten GST and / or VAT tax implications . Request share sample invoice too.

Thanks

AI Summary

Indian Company Seeks Guidance on International Invoicing, GST Implications; LUT Suggested to Avoid Taxes or Opt for Refunds. A company in India, registered as a private limited entity, sources and supplies goods to a principal in the USA, who then markets the goods globally as a franchise. The principal requires invoices to be raised directly to various international buyers with a 15% margin. The profit from these transactions is shared among partners in India. The inquiry seeks guidance on invoicing and accounting for payments in India, specifically regarding GST or VAT implications. The response advises billing per the agreement, using a Letter of Undertaking (LUT) to avoid taxes, or opting for a refund process.