Selling through ebay usa, what is tax implications in india

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Rahul Gupta (Querist)
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17 March 2013 My Friend is selling in usa through ebay usa. He is taking orders from ebay site. He sends his own invoice to customer in USA. He is selling bedsheet.

He is getting payments in INR through paypal in his bank account. During the year there is receipt of Rs 25 lakh in his account.

He has arranged a company here in India, this company purchase material and delivers in USA.

On confirmation of delivery of goods, ebay release his payment. On receipt of payment , he release payment to procurer. In whole exercise he earns around Rs 150 per sale.

Total sale is Around Rs 25 lakh, net profit on such sales is around Rs 1.25 lakh only.
Question is:
1) Should he get him self registered in Sales Tax?
2) Will these transaction be termed as commission sales or own sales?
3) How should he account for in his IT return, . Should it be shown as commission income of just rs 1.25 lakh or sales of Rs 25 lakh and reduced by expenses of 23.75 lakhs?
Please share your thoughts on this?

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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17 March 2013 do he has right to purchase material from anywhere instead of present supplying company, if yes than its purely business and he needs to get registered in VAT/CST and should file ITR for business. If no then he is just an agent to supplying company and only have to file ITR with commission income.

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