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

[Atul Rathod]

Do billing as per the agreement. From GST Perspective-No difference, just take LUT and don't pay any taxes.

Howver, you can also do with payment and go for refund.

AI Summary

Export supplies under GST: furnish LUT to avoid tax or export under payment and claim refund afterwards. Invoicing should follow the commercial agreement; exports can be treated as zero rated supplies by furnishing a LUT to avoid payment of IGST, or supplies can be made with tax payment and subsequent refund claimed. Accounting must record the invoiced sale value to the overseas buyer and separately allocate the margin among Indian partners per the agreement, with compliance centered on export classification and supporting documentation.