GST issues - Credit card transactions - reselli...

GST issues - Credit card transactions - reselling/gifting the items to friends and relatives

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This issue is faced by many dimers.

Case1:
You buy mobile phone or any other consumer items using your credit cards.
Some you gift them, some you sell them, some you help other people to buy using your credit card.

Case2:
You buy gift cards using your credit cards.
Some you gift them, some you sell them, some you help other people to buy using your credit card.

Do you have to pay GST since you are reselling them (even though you can claim them that you have gifted them)?

I know the answer and also how to tweak it.

If I tell the answer now, you get biased by that and all replies would be revolving around that.

I would like to see three types of replies.

1)Complete legal according to GST law.
2)Some what legal and some what ambiguity of GST law or any other law..
3)Complete tweak and legal but not ethical

13 Comments  |  
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@ramadesidime So you have the answer and need a problem , that makes an unusual post stuck_out_tongue

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Gift tax is to be paid by the person receiving if it crosses 50k(gifts received from strangers) in cash/chq amt so things like mobile phones gifted don’t have any gift tax component. In case 1 if you sell a mobile then no GST is required as it is considered as selling used item(just for technicality you can open the box & it should be considered as used) but you need to show the amount received from selling as other income. As for buying for other people again treat that as used goods selling. Case 2 also falls in similar category as gift cards are not exactly cash/chq in the sense they cannot completely replace cash/chq.

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If bill of GC and Mobiles is in your name,and you are reselling, and performing trade activity, you need to pay GST and claim input credit from the invoice which you have got from amazon/FK etc
If bill is not in your name ( highly recommended ), you just need to pay income tax on the additional income, since you are just a commission agent, GST is only applicable you if your commission income exceeds 40L INR which is highly unlikely. so follow approach 2, take bill directly on buyer name, work as an intermediary

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karanoshan wrote:

If bill of GC and Mobiles is in your name,and you are reselling, and performing trade activity, you need to pay GST and claim input credit from the invoice which you have got from amazon/FK etc
If bill is not in your name ( highly recommended ), you just need to pay income tax on the additional income, since you are just a commission agent, GST is only applicable you if your commission income exceeds 40L INR which is highly unlikely. so follow approach 2, take bill directly on buyer name, work as an intermediary

Yes but that can be avoided by treating it as used goods selling for which no GST is needed but in that case you will need to show the entire sell amount in your other income & pay tax on that so not such a good idea especially if total amt is exceeding 50k(as till that amt you can show it as gift income received from strangers & which is tax free).

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guest_999 wrote:

Yes but that can be avoided by treating it as used goods selling for which no GST is needed but in that case you will need to show the entire sell amount in your other income & pay tax on that so not such a good idea especially if total amt is exceeding 50k(as till that amt you can show it as gift income received from strangers & which is tax free).

I dont thinking person posting this is dealing in amounts less than 50k per annum stuck_out_tongue_winking_eye

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karanoshan wrote:

I dont thinking person posting this is dealing in amounts less than 50k per annum stuck_out_tongue_winking_eye

yeah I figured that out but it is a good suggestion for someone only occasionally doing such things. smile

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androgame wrote:

@ramadesidime So you have the answer and need a problem , that makes an unusual post stuck_out_tongue

My solution comes under either type 2 or 3.
If the type 1 option is nearer to my solution financially (just couple of more percentage points cost), I would as well follow type 1 option.

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guest_999 wrote:

Gift tax is to be paid by the person receiving if it crosses 50k(gifts received from strangers) in cash/chq amt so things like mobile phones gifted don’t have any gift tax component. In case 1 if you sell a mobile then no GST is required as it is considered as selling used item(just for technicality you can open the box & it should be considered as used) but you need to show the amount received from selling as other income. As for buying for other people again treat that as used goods selling. Case 2 also falls in similar category as gift cards are not exactly cash/chq in the sense they cannot completely replace cash/chq.

Agreed. Perfect.No GST involved. But it is not ethical for some.

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karanoshan wrote:

I dont thinking person posting this is dealing in amounts less than 50k per annum stuck_out_tongue_winking_eye

Yup, it is >50k of income generated from the resales and turn over of >40L.

But the thing here is, this is not like steady business, it keep changes every year. For example, we may stop doing this at any time, the moment our CCs are restricted by banks (personal CC can not be used for business purpose).

Also, it is not possible (subjected to correction) to get GST number temporarily and claim input credit.

Any inputs on this, any other alternative ?

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ramadesidime wrote:

Yup, it is >50k of income generated from the resales and turn over of >40L.

But the thing here is, this is not like steady business, it keep changes every year. For example, we may stop doing this at any time, the moment our CCs are restricted by banks (personal CC can not be used for business purpose).

Also, it is not possible (subjected to correction) to get GST number temporarily and claim input credit.

Any inputs on this, any other alternative ?

you can get a GST number, mention it on the bills you give to buyer
then pay GSt and claim input credit
it is not necessary to to have a steady business, you just need to file zero return when there is no business in a particular month
however i suggest you take bills directly on buyer name, saves lot of effort and compliance issues

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ramadesidime wrote:

My solution comes under either type 2 or 3.
If the type 1 option is nearer to my solution financially (just couple of more percentage points cost), I would as well follow type 1 option.

My take is,
as an individual, it is very difficult to cross 40L turn over either for gift vouchers or consumer items.
The reason is, we will have 2 to 3 CCs with (1L to 2L credit limit) and it is very difficult to achieve 40L with in the financial year.

If the person has more than 3 CCs and has total credit limit of more than 8 lacs must have got other income and must be filing IT returns. He can manage the GST issue via gifting and second sales. This is either tweak or not ethical.

Rest of the persons should follow GST rule, which is completely legal.

Most of the time, we will use or family/friends CCs, so no gst worries.
But at the same time, if the family member is tax payer, he needs to be a bit careful while filing the tax.

So the key here is, use multiple persons CCs or use Add On cards to some extent.

Do you see any flaw in this?

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karanoshan wrote:

you can get a GST number, mention it on the bills you give to buyer
then pay GSt and claim input credit
it is not necessary to to have a steady business, you just need to file zero return when there is no business in a particular month
however i suggest you take bills directly on buyer name, saves lot of effort and compliance issues

Agreed.
Since it is a temporary business, one may not want the hassle of filing gst returns.

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