What is Taxability of Drop-shipping transactions?
Nexa Consultancy | Startup & Finance Glossary
In a drop-shipping model, the tax liability can be complex. Typically, there are two transactions: the sale from the supplier to the retailer, and the sale from the retailer to the end customer. GST must be correctly applied to both legs of the transaction based on the place of supply.
Startup Example: A D2C brand in Delhi gets an order from a customer in Mumbai. It instructs its supplier in Gujarat to ship the product directly to Mumbai. The supplier bills the D2C brand (B2B transaction), and the D2C brand bills the end customer (B2C transaction). Both invoices must have the correct GST applied.
We help e-commerce businesses navigate these complex GST scenarios.