Without a single doubt, Yes, dropshipping is absolutely legal in India and that’s the very reason why so many people in the country are trying it out. So yes, no doubt, you can give it a shot too, but still, let’s go over some details you should know beforehand, shall we?
Is Dropshipping Legal in India?
You might have seen or noticed that in the last few years or so, the business model of dropshipping has become very popular among many young entrepreneurs in India, especially among those who seek to set up their own online store without a huge capital commitment, right? But before you actually dive headfirst into this business and start your own online store, you should know about the legality of this business in the country, right? Well, the thing is, Dropshipping is perfectly legal in India, so it is pretty much a green light for you.
For that reason, there is no need for you to go through any legal formalities before launching this amazing business method. However, it can not be stressed enough that being legal does not avoid any of the standard regulations that all business owners must follow, you know? The Indian laws related to both the way in which a product is marketed and the taxation of that product are what you should pay close attention to and comply with.
Legal Requirements for Dropshipping in India
In order for you to operate a dropshipping business legally in India, you must first familiarize yourself with some of the legal requirements. The major aspect of this would be the Goods and Services Tax (GST) which is a tax levied on most of the goods and services traded in India, correct? And just so you know, if your business exceeds Rs. 20 lakhs in revenue in a financial year, you are obligated to get a GST number. Getting a GST number is a relatively simple process, it can even be done online. Once registered you will have to file GST returns periodically, showing your earnings and the tax that you are paying.
Though, for the small business that it isn’t reaching the Rs. 20 lakh level, understanding GST is still good, especially if you plan to grow your business in the future. Also, multi-seller platforms like Amazon and Flipkart will almost always ask for a GST number before selling your products on their platform.
Besides GST, income tax is another area to tackle, you know? The income generated from your dropshipping business is also subject to income tax, with rates that vary with your earnings. This starts from 0% for incomes up to Rs. 2.5 lakhs and increases to 30% for the top bracket.
Being sure that your product line is legal is also important. Selling prohibited items such as drugs or toxic chemicals is illegal and will result in significant legal consequences, that’s for sure. Always check that your product will comply with Indian rules and those can be very specific and it only depends upon what you are selling and which country your sales are coming from, mostly.
