Indian individuals/firms are screwed...kind of.

[jainy25]

To all my Indian fellas here. You might already be aware of the new GST regime.

Got a mail from paypal last night about some massive changes happening in their policies - https://www.paypal.com/in/webapps/mpp/ua/upcoming-policies-full

The major drawback is they will now start charging 18% GST on all transactions. Yeah...despite your revenue being from export of services/software, you still have to bear that 18% cut if you take payment from Payoneer/Paypal and other such services.

Someone started a petition against this move and to push government for making amendments to the act - https://www.change.org/p/finance-mi...e-paypal-payoneer-rules-regulations-for-india

High time we all signed up for this and prevent the entire freelancing/blogging/software industry from dying a slow, painful death.

 

[piratebay]

This is Insane.. Have they gone mad? 18% is too less.. they should make it 80%

When the corrupted ones are getting away.. We are providing PAN details and complying with all rules, we will again pay 18% gst tax.. F U Govt

 

[worlockt]

I don't this there is any issue for pay 18% GST.
They are charging this 18% not at entire amount you receive but the amount they charge as service like 3.6% or something.

This practiced by almost all sector like Indian payment gateway, direcPay, EBS, Payu...etc.

Good thing i found in this such big companies like hostgator, digitalocean, payoneer, paypal are bounding with India tax regulations and registering here and so you can force them law binding .
Earlier you were not able to put nabbed these companies coz there were operating from outside and just using India as outsource.

You know what, they have to explain why block your fund , If improper way you have already open gate of court. So welcome it and say thanks to good government policies.

 

[jainy25]

I don't this there is any issue for pay 18% GST.
They are charging this 18% not at entire amount you receive but the amount they charge as service like 3.6% or something.

This practiced by almost all sector like Indian payment gateway, direcPay, EBS, Payu...etc.

Good thing i found in this such big companies like hostgator, digitalocean, payoneer, paypal are bounding with India tax regulations and registering here and so you can force them law binding .
Earlier you were not able to put nabbed these companies coz there were operating from outside and just using India as outsource.

You know what, they have to explain why block your fund , If improper way you have already open gate of court. So welcome it and say thanks to good government policies.

As of now, the communication that people have had with Paypal India, it seems they are going to charge 18% on whole transaction, more so because they are going to operate as an Indian company from 2nd October.

You clearly don't seem to understand difference between export of services and domestic services. As a service provider you cannot charge GST to your clients abroad. It is an indirect tax meant to be collected from domestic firms/individuals and paid to the government. So you are essentially paying that 18% out of your own pocket.

Now if Paypal starts charging that 18% gst, it will severely hit the community. Although refundable, but the process is complicated and still unclear. You would have to ask your bank to get a FIRC from Citibank (Paypal's intermediary) to prove that the transaction was that of an export sale. Each FIRC costs Rs. 200 + 18% tax. Then and only then will you be able to get your 18% amount back.

Do you know that the government has forced Paypal to auto-withdraw funds from the account balance to the user's bank account every alternate day. That means 15 FIRCs every month.

Or the alternative is to file a Bond and pay a Bank guarantee (that too is as per the amount deemed by a HUMAN jurisdiction officer). Corruption *cough cough*

Can you imagine how much it would hurt the working capital of small firms?

I am not against the GST per se. I do, in fact appreciate the government in implementing this new regime. Takes guts, that the previous government didn't have. But the way it is implemented will kill a lot of businesses. The sad irony is our country receives a big chunk of it's revenue through software/service export, but the government never analyzed "Services" part while drafting the Goods and Service Tax.

 

[worlockt]

As of now, the communication that people have had with Paypal India, it seems they are going to charge 18% on whole transaction, more so because they are going to operate as an Indian company from 2nd October.

You clearly don't seem to understand difference between export of services and domestic services. As a service provider you cannot charge GST to your clients abroad. It is an indirect tax meant to be collected from domestic firms/individuals and paid to the government. So you are essentially paying that 18% out of your own pocket.

Specifically on above both points:

1) Can you provide us a authentic link which confirm the same. 18% on whole amount.

2) Export of services and domestic

I don't know what sources you get this knowledge that GST amount will be charged on entire amount. I am not here to explain my understanding just read 2nd point:
https://www.paypal.com/in/webapps/mpp/ua/upcoming-policies-full

We have updated our UA to comply with local laws applicable to Indian companies including local taxation laws. We have been advised PayPal Services will attract a GST rate of 18%. Please consult your tax advisors in terms of your eligibility for refunds.

What is paypal services ?

To receive funds and deliver to seller. For that they are charging fee ( 3.5-4.95 %wise ). On this amount they are charging GST.
And
to claim that GST you need to follow as you said above.

Don't panic and spread rite information.

 

[jainy25]

Well, there is no official confirmation yet. But someone on another forum contacted them to seek clarification on this and got the following reply in response -

Thank you for contacting PayPal with your concern.

I do apologize for the confusion. The email notification that you've received is not about an increase on the transaction fee that PayPal is currently charging for all the payments received. It will remain 4.4% plus $0.30 USD fix rate.

The email intends to let you know that effective October 2, 2017, PayPal will update our User Agreement to comply with local laws applicable to Indian companies including local taxation laws. In effect, it might incur you 18% GST rate. With this we are suggesting for you to consult with your tax advisors regarding your eligibility for refunds.

I am confident that it clarifies the issue. Have a great day!


You'll find answers to any further questions in our improved Help Centre. For further assistance, you can call us at 1-800-419-9833 (English service only) from 9:00 AM IST to 9:00 PM IST, Monday to Sunday.

Going by this language it doesn't seem they are going to charge GST just on transaction fee.

Either way, the government is trying to push service exporters to register for GST. So even for a single rupee that you get from your clients/payment companies abroad you have to file it's return (even if it is a zero-rated supply)

More here - Software Exports – GST makes it difficult to do business | ProductNation - The industry watering hole for software product industry. An iSPIRT initiative

 

[Rox]

More reasons to switch to crypto!

 

[worlockt]

@ Jalny25 : Mark my words. There won't be 18% on received amount. Actually they have no right to charge in such manner.
I understand business and tax regulation.

@ Rox: Still crypto have to travel a lot for legal business.

 

[jainy25]

@ Jalny25 : Mark my words. There won't be 18% on received amount. Actually they have no right to charge in such manner.
I understand business and tax regulation.

@ Rox: Still crypto have to travel a lot for legal business.

Fingers crossed. I hope that would be the case. But it really shouldn't be charged anyway. This is really just plain stupid given that the revenue is not from India. This never happened even during the previous tax regime. "They" i.e. the government has no right to force Paypal in all honesty when they know the revenue is from export sales.

 

[Rox]

@worlockt; Why do you think so? Accepting payments in crypto and showing it as an income is perfectly legal! It only becomes a problem if you try hiding your income.

Here is what I feel will happen - Since they are now registered in India, they will need to obtain a license which will help them allow payments from Indian PP to Indian PP (not available currently). Once this is allowed, they would charge such payments with 18% GST and exclude all foreign payments from 18% GST.

Just a thought - Why doesn't PayTM charge GST when you receive money? Who gave PayPal faggots the right to charge 18% GST!?

Start boycotting them, else, they will eat up your business and force you to close it!

 

[worlockt]

@Rox; I will try to clear doubts as per my understanding:- Also my p.o.v. will be as per India rules.

@worlockt; Why do you think so? Accepting payments in crypto and showing it as an income is perfectly legal! It only becomes a problem if you try hiding your income.

As we all know crypto is not centerlize or recognized by any finance institute - So it doesn't fit under e-wallet section.
Cryptocurrencies are not Legal yet in India. So until a currency recognize not consider as legal tender. But yes rules are not clear so there is chances you may show or may face issues by tax level. Whilst small amount upto 10 lakh i think is ok.

Not legal: https://inc42.com/buzz/bitcoin-cryptocurrency-india-government/

[FONT=proxima_nova_rgregular]Here is what I feel will happen - Since they are now registered in India, they will need to obtain a license which will help them allow payments from Indian PP to Indian PP (not available currently). Once this is allowed, they would charge such payments with 18% GST and exclude all foreign payments from 18% GST.[/FONT]

In both cases paypal has NO authority to charge 18% GST . Again paypal can charge only 18% on that amount which is being charge by their service.
Within India PP account ( if it happen )seller will issue invoice with 18% ( or whatever applicable ) for buyer and charge .

[FONT=proxima_nova_rgregular]Just a thought - Why doesn't PayTM charge GST when you receive money?[/FONT]

Paytm works earlier like a service provider, and as start up business they provide their service as FREE. So no GST or any tax coz they were not charging.
and now 2 changes:-

1) Paytm is working like a SMB under RBI license and so act like a payment bank ( e-wallet ) and currently too not charging upto 20000/- INR.
and now 2% for customer and on that amount will be GST.

2) They may revise price anytime, when their board team finalize it.
You can take this as JIO offer, once get addicted will charge for service.

( https://blog.paytm.com/now-send-money-from-paytm-to-bank-account-at-0-2c0aea6c3462 )

 

[Rox]

Agreed BTC is not legal tender in India, however, no one has declared it illegal as well. If you cash out Bitcoin into your bank account (let's say you use Localbitcoins, sell BTC and get money into Bank) - isn't that to be reported as income form Business?

Any income, irrespective of the medium used is to be reported to Tax authorities.

I can understand if you don't convert BTC to INR and keep it in some BTC wallet - that becomes a sticky issue as to how you show it as income and what happens to the amount (value) that has increased over a period of time (due to BTC trading).

 

[worlockt]

Agreed BTC is not legal tender in India, however, no one has declared it illegal as well. If you cash out Bitcoin into your bank account (let's say you use Localbitcoins, sell BTC and get money into Bank) - isn't that to be reported as income form Business?

Any income, irrespective of the medium used is to be reported to Tax authorities.

I can understand if you don't convert BTC to INR and keep it in some BTC wallet - that becomes a sticky issue as to how you show it as income and what happens to the amount (value) that has increased over a period of time (due to BTC trading).

It is little complex but i will be using as easy method ( :cough: possible )

[FONT=proxima_nova_rgregular]If you cash out Bitcoin into your bank account (let's say you use Localbitcoins, sell BTC and get money into Bank) - isn't that to be reported as income form Business?[/FONT]

You say BTC is money and and i exchange in INR and show as business earning. ( 3 claims )

As we agree BTC is not money But somehow you convince them then you can not exchange with non-registered firm ( not allowed ). Foreign Money exchange comes under FEMA ( Foreign Exchange Management Act ) and it should be processed by any registered firm like any bank, forex body, exchange center...

So solution, It should receive as wire transfer but you need to keep proper track ( Here comes business claim )
You deliver service/item to your clients ( not Indian user ), issue proper invoice ( no GST ), keep in record as well.They pay you in BTC and you exchange with LBC, Paxful...etc with wire transfer. Money arrive in bank. Show it in income tax BUT again keep invoice record for long time at least 5 years.

[FONT=proxima_nova_rgregular]that has increased over a period of time (due to BTC trading).[/FONT]

Here comes main issue. When you say money earn via trading not business, So for this different steps. You need to trade with DEMAT account. Actually as per India regulation foreign money must pass through bank.
This is the reason paypal, payoneer or any other e-wallet do not have feature to hold fund in account. Also it is noticed very rarely any e-wallet or money bank provide debit / credit card service for India.

Solution: If you do not have demat account, you need to buy BTC or any crypto via bank transfer ( NEFT/RTGS/IMPS/Cheque ) then let it grow.Keep each trade record. Sometimes many promising crypto have no INR buy option, so we used to convert with other crypto, have those action in record.

I know record, record...again hectic BUT if you say crypto is your own bank then act like that. Without record it won't be rightful yours in real world.

NOTE: Guys i am not saying you need to be panic but as per rule and safe side these are simple things to follow.And i also assume for small amount yearly around 5-6 lakhs INR is good enough and you are in younger stage. For long run and to insure your capital, consult exp. CA/ read online articles. After all this is money and as hard we are serious to earn to be same to prove it rightful.

While some anonymous way always in our world but i do not recommended them.

 

[Djlatino]

Wow, that's pretty rough.