Urgent Query - Export from India to the UK

[Raj Targotra]

Hello Respected members,

I have an urgent query regarding Goods movement and GST, I would be really thankful if you could please share your valuable advise and guide me through the right process. I have a UK based Limited company and have formed a subsidiary company in India. The role for my Indian company is to receive the products from suppliers based in India, check the products quality, rebranding and repackaging the products and then ship them in the UK.

The UK company is responsible for paying any expenses and wages to the employees in India.

Here is my query: My suppliers are based in India and they will be dealing with my team based in India. Now, if suppliers ship to and bill to my Indian company (for products quality check and rebranding), does that mean my Indian company has to raise a new invoice to the UK company to ship the final products in the UK ?

Does that mean my Indian company has to include their profit margins + taxes in the new invoice ?

If they do so then this adds more to the final product cost making them overpriced and I might have to struggle in selling them in the UK.

Is there any workaround that I can use Indian company just to do back office work (quality checks & rebranding) and not to add any other costs so that the final product remains within the reasonable price.

What is the best way to bring products from supplier in India to the UK without adding any additional costs ?

I'm looking to bring my first shipment very soon and would really appreciate a quick response.

I look forward to hearing from you soon.

Regards,

Raj

[Shilpi Jain]

As far as the Indirect taxes are concerned there is no requirement for the Indian company to add its profit margin at fair price. It can add its cost and a reasonable margin and sell it to the UK entity.

You may have to look at any transfer pricing requirements under Income Tax Act.

Also there could be some tax benefits which may be eliglible fo the Indian entity for the exports and if the Indian supplier has some import components in its procurements, there could be some benefits that can be encashed by him as well.

Further, since it is

[KASTURI SETHI]

Madam Shilpi Jain,

Pl. refer to your views above.

The words, "Further, since it is" indicate that you wanted to say something more. Is your reply complete ? Will you please confirm ? Thanks a lot.

[Shilpi Jain]

Oh... Nothing more to add. that just remained... missed to delete...

AI Summary

GST treatment for cross-border onward supply: Indian subsidiary may invoice cost plus reasonable margin while observing transfer pricing rules. The Indian subsidiary need not invoice the UK parent at a mandated fair price for onward shipment; it may invoice based on costs plus a reasonable margin for its services. Transfer pricing compliance under the Income Tax Act must be considered, and export-related tax benefits may be available to the Indian entity or its suppliers where applicable.