Indian merchant FOREX issues

things that need to be checked before starting an online business in india

[Manish Singh]

I am an indian merchant doing business on the internet for past 6 months. I have accounts at Paypal, 2checkout.com where i accept dollars payment for the work I do.

I wanted to know from other fellow Indian merchants whether I need to get any special permission from the Govt of India or the RBI? Does FEMA Act apply on online businesses?

MS

[vibgyor79]

What type of business are you doing? Are you selling a product (that needs to shipped) or selling a service?

Check [rbi.org.in...] and send an email. I got a response from them when I had a question regarding credit card usage.

Even though I am not a expert, I think there is no limitation of the INFLOW of dollars.

[Manish Singh]

Thanks for the RBI link, I will check the website. I am currently doing 2 or 3 different businesses. One involves exporting of a Software (through downloads only), affiliate commissions, google adsense, consultation for setting up servers, web designing. I invoice my customers either through 2checkout or Paypal. From some places i receive a dollars check which i deposit in my Indian Bank account.

Do I need to get the Import Export License?

[vibgyor79]

You don't need a license - since you are not physically shipping your products through the customs. Just pay your taxes regularly and you should be fine. Talk to a Chartered Accountant though.

>>> consultation for setting up servers, web designing

If you do web designing/consultation and you are receiving funds in Rupees, you will have to pay 8% service tax. If your clients are in USA/other countries and they are paying USD, you are exempt from paying service tax.

[Manish Singh]

You don't need a license - since you are not physically shipping your products through the customs. Just pay your taxes regularly and you should be fine. Talk to a Chartered Accountant though.

I consulted my Chartered Accountant on this issue. Here is what the law says (in my words).

if you sell any kind of softwares, script, ebooks or other products and services etc through any means (exporting on media or through downloads) you are required by law to have an Import Export License.