Nowadays, eCommerce is the fastest growing market in the world, and the Goods and Services Tax (GST) is a part of it. On July 1, 2017, India passed a GST that replaced all other state and central taxes levied by Indian businesses.
This short guide answers all your questions about sales tax stores based in India and helps you set up the taxes perfectly.
Intra-state sales are transactions carried out within one federal state (e.g., Maharashtra). Interstate sales are transactions between states (e.g., selling from Maharashtra to Goa).
How to set up taxes on Shopify
To set up your Shopify tax simply follow these steps:
To set up tax rates, go to your Shopify store on the Settings > Taxes page in your Shopify admin.
If you do not see India in the list of countries in the Tax rates list, you will need to add it as a shipping zone first.
Check the countries in the Tax rates list, and if you don’t see India in the countries list, you will need to add yourself as a shipping first zone. Follow these steps on how to add shipping first zone.
- Go to Setting > Shipping > Shipping profiles and click Create a new profile.
- Click Create Shipping zone and select India.
Now you are eligible to set up taxes rates for each state. Go to Settings > Taxes and check India is included in the tax rates list. So now have to start setting up tax rates for India.
- Go to Settings > Taxes in your Shopify admin and click on India.
- For the state your store is based in, add the SGST (or UTGST) rate and choose to add 9% federal tax from the drop-down.
- For all other states, add the IGST rate and choose instead of 9% federal tax from the drop-down. Enter the 9% CGST tax rate into the Country Tax field.
Different Tax Rates and Why Use?
To add Tax overrides, navigate to Settings > Taxes in your Shopify admin, select India and scroll down to the Tax overrides section. This feature can be useful if some of the products you sell are taxed at different rates.
Shopify does not automatically apply GST to transactions in India. Therefore, you must use a third-party app. Shopify India stores have featured apps specific to Indian businesses, such as COD (cash on delivery) verification in India.
The Indian E-commerce market is expected to expand to US$ 111.40 billion by 2025 from US$ 46.2 billion as of 2020. Shopify has grown so successful because of its ability to provide an easy-to-navigate, easy-build website platform that offers everything you need to grow a successful business. Its ability to integrate with hundreds of apps, including third-party ones specific to Indian businesses, taxes, and other regulations, makes it an even better choice for businesses of all sizes in India.