GSTR 1 6a invoice gross amount or after paypal fees deduction, Goods and Services Tax - GST

[Shan S]

Export 6a table - invoice value should be invoice amount raised to client for software service

or the amount received in the bank account after paypal charges

Eg:$1000 raised to client $100 paypal fees deducted and Bank account remittance is 74000Rs.

Then in gstr1 74000 should be input or 85000 Gross invoice amount should be input, as FIRC will be only for 74000 rs. Paypal charges gst for its fees though

Pl clarify- if 85000 Rs. Gross invoice amount to be reported, then what should be shown as proof for difference in receipt in bank and invoice amount. When we opt for LUT without payment of tax.

Posts / Replies

[Shilpi Jain]

Gross amount to be shown.

[Shilpi Jain]

For export of this software services, softex forms also would be filed. Against that form you will have to show the actual realisation.

Check under FEMA how is this proved so that the same can be used to justify under GST.

[KASTURI SETHI]

In GSTR-1 Table 6 (Column 6 A) full invoice value i.e. Rs.85000/- is to be shown.

No deduction is allowed on account of PayPal fee (processing fee/transaction fee)

PayPal is intermediary. Your customer in a foreign country makes full payment as per invoice value. but PayPal recovers his processing fee/charges/transaction fee from your export proceeds. You are getting service from PayPal and thus you are yourself to bear the processing fee/transaction charges.

How the question of difference arises ? Pl. elaborate your query with full facts. Is there not any agreement executed with PayPal ?

[YAGAY andSUN]

In the case of export of services (such as software services) and reporting in GSTR-1, there is some confusion regarding whether to report the gross invoice amount or the net amount received after deductions like PayPal fees. Let's break it down and clarify how to report it correctly.

GSTR-1 - Export of Services (Table 6A)

For export of services, you are required to report the value of export invoices in Table 6A of GSTR-1. The key points to note are:

1. Gross Invoice Value:
   • The value you should report in Table 6A for export invoices should be the gross invoice amount raised to the client, which in your example is $1000 (or its equivalent in INR at the applicable exchange rate on the date of supply).
   • PayPal fees or any other charges deducted by payment processors (such as PayPal) should not reduce the gross invoice amount. These are treated as separate expenses that affect your overall profit, but the export invoice value for GST purposes remains the full value of the service rendered (in this case, $1000).
2. Foreign Exchange Receipts:
   • The amount received in the bank account (after PayPal charges) should be used for the purpose of reporting the actual foreign exchange receipt in Table 6A in terms of the value of foreign exchange received (i.e., in INR).
   • The Foreign Inward Remittance Certificate (FIRC) or other similar documents (such as bank statements or remittance receipts) should reflect the amount received in your bank account, which, in your example, is INR 74,000.
3. GST Treatment under LUT (Letter of Undertaking):
   • If you are exporting under LUT (Letter of Undertaking) and opting for a tax-free export (i.e., without payment of GST), you do not need to pay GST on the export. In this case, you will not report GST on the export in GSTR-1. Instead, you are just reporting the export invoice amount and the foreign exchange receipt details.
   • Even though PayPal charges GST on their fees, this should be treated as a cost to you and does not impact the GST treatment of your export invoice, as GST is not levied on the export of services under LUT.

Clarifying the Reporting in GSTR-1:

1. Gross Invoice Value:
   • Report the gross invoice amount raised to the client in USD ($1000), converted to INR at the applicable exchange rate.
   • Example: If the invoice is $1000, and the exchange rate is 1 USD = 75 INR, then the gross invoice value in INR would be 75,000 INR.
2. Receipt in Bank (FIRC):
   • In Table 6A (for export of services), under the foreign exchange receipt section, report the amount actually received in your bank account (in your case, INR 74,000) as per the FIRC or the bank remittance statement.
   • This amount is after the PayPal fee of $100 (which would have been deducted by PayPal), but since GST is not applicable to the PayPal fee (it is a charge for processing the payment), the fee will not reduce your gross export invoice value in the GSTR-1.
3. Proof of Difference:
   • There is no need to show the difference between the invoice amount and the amount received in your bank as a separate item in GSTR-1. The important point is:
     • You report the gross export invoice value in INR in Table 6A (which will be the value of your invoice).
     • You report the amount actually received in foreign exchange in INR as per the bank receipt (FIRC) in Table 6A.
   • The difference between the invoice value and the bank receipt (due to PayPal charges or other deductions) is typically treated as part of your business expenses and doesn't affect your GST reporting.
4. LUT and Non-Payment of GST:
   • If you're exporting under LUT and not paying any GST, ensure that:
     • The gross invoice value (before any deductions) is reported.
     • The export supply is zero-rated, meaning no GST is applicable on the export invoice.
     • Proof of receipt (FIRC or similar documents) will help establish that the export payment was made in foreign exchange.

Example Breakdown:

• Gross Invoice Value: $1000 (convert this to INR, let's assume it is 75,000 INR at the exchange rate of 1 USD = 75 INR).
• PayPal Fee: $100 (PayPal charges are a separate cost for you as the service provider, but don't affect your export invoice value for GST purposes).
• Bank Remittance (After PayPal Fee): INR 74,000 (this is the actual amount received in your bank account).

In GSTR-1 (Table 6A):

• Export Invoice Value: Report the gross invoice amount, which is 75,000 INR (as per the converted invoice value).
• Amount Received (FIRC): Report the amount received in your bank (after PayPal fee), which is 74,000 INR.

Conclusion:

• For export of services under LUT, report the gross invoice amount in Table 6A of GSTR-1, which reflects the total value of the service you provided.
• The PayPal charges (or any other processing fees) do not affect the reporting of the export value in GSTR-1. These are separate business expenses that you can account for elsewhere.
• Ensure that the bank receipt (FIRC) is correctly reflected in your return as the amount received in foreign exchange.

Let me know if you need more clarification or further details!

[Shan S]

the difference arises, because the FIRC shows dollar remitted after their fees and charges.

and the original dollar received is not mentioned in FIRC nor their fees break up.

Though it is obtained from their reports. will that be an able supporting document for the transaction?