03 March 2022
If a agent import behalf of principal (outside india), to do basic assembly work and supply to customer in India on behalf of principal. (Principal will raise invoice to customer in USD from outside india) What will be the following impact 1. Custom duty who will pay also valuation of goods. (we can registor the bill of entry in customer name?) 2. agent will raise service charge to principal 3. GST impact to supply of goods to customer in india
09 July 2024
In the scenario where an agent imports goods on behalf of a principal (located outside India), assembles them, and supplies them to customers in India, several considerations arise regarding customs duty, valuation of goods, service charges, and GST implications. Here's how each aspect typically plays out:
1. **Customs Duty and Valuation of Goods**: - **Customs Duty Payment**: Customs duty is typically paid by the importer of record, which in this case would be the agent acting on behalf of the principal. The agent would register the Bill of Entry in their own name or on behalf of the principal, depending on the arrangement. - **Valuation of Goods**: The valuation of goods for customs purposes would follow the Customs Valuation Rules, which determine the transaction value, adjusted for certain elements like freight and insurance, if applicable.
2. **Service Charges by Agent to Principal**: - The agent may charge service fees or commission to the principal for handling the importation, assembly, and supply processes in India. These service charges are typically agreed upon in the contract between the agent and the principal.
3. **GST Impact on Supply of Goods to Customers in India**: - **Supply of Goods**: When the agent supplies the assembled goods to customers in India, GST implications arise. The supply of goods would be considered as a taxable supply under GST. - **GST Registration**: The agent would need to be registered under GST if their aggregate turnover exceeds the threshold limit for registration. - **GST Liability**: The agent would charge GST on the supply of goods to the customers in India. The rate of GST would depend on the classification of the goods under the GST tariff.
Since the principal raises the invoice to the customer in USD from outside India, the transaction is treated as an import of goods into India for GST purposes. The agent, as the supplier within India, would need to account for GST on the transaction.
In summary: - The agent pays customs duty on behalf of the principal when importing goods into India. - The agent charges service fees to the principal for their services. - GST applies to the supply of assembled goods to customers in India, with the agent responsible for collecting and remitting GST to the tax authorities.
It's advisable for both the agent and the principal to have clear agreements and documentation in place to manage these transactions efficiently and comply with customs and GST regulations.
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