Allowability of import when payment mode is paypal or credit cards

A. Can a proprietorship firm import goods (using his firm's Name IEC code and GST number) and using credit card (which is issued by HDFC bank to his individual name through international supplier (e-commerce platform).

These goods attracts IGST which are claimed back by business and sold to another parties in India. As goods are sold further.

B. Is it okay as in this route bank is bypassed for foreign remittance ?

C.To whom should BOE of imported goods to be submitted ? As bank has not transferred the amount so bank is not accepting this BOE.

Reason for this payment is amount is less than USD 1000 and supplier over e-commerce platform would never share bank details to wire the amount/Also e-commerce never allow to share direct contact information.

Request you to help me to find out the solution for the same.

Hi Ankit,

Your query touches on some important practical and regulatory aspects related to importing goods via online payment methods like PayPal or credit cards for a proprietorship firm.

Let me break down your questions and give you clarity on each:

A. Can a proprietorship firm import goods using its own IEC/GST but pay via an individual’s credit card (e.g., issued in individual’s name)?

Yes, it is generally allowed, provided the import is for business purposes and done under the firm’s IEC (Import Export Code) and GSTIN.
The goods should be imported in the name of the proprietorship firm and the IEC must be used accordingly.
Payment via a personal credit card or PayPal is common for small imports, especially under USD 1000, often on e-commerce platforms.
The key point is that the import documents, customs declarations, and invoices should reflect the firm's name and GSTIN, as this allows the firm to claim IGST input tax credit legitimately.
The fact that the credit card is in the individual's name is not an issue per se, but ideally, it should be linked to the proprietor to avoid discrepancies.

B. Is it okay that the payment route bypasses the bank for foreign remittance?

The Foreign Exchange Management Act (FEMA) mandates that all foreign exchange transactions should be routed through authorized dealers (banks).
However, payments through PayPal or international credit cards are routed through authorized intermediaries (like banks or payment gateways) who have the required approvals and comply with FEMA rules. So, this is not considered bypassing the banking channel.
Such payments are classified as ‘Merchant Acquirer’ transactions and are compliant with RBI guidelines.
Hence, payments via PayPal or credit cards are accepted methods for small imports and fall under legal compliance.

C. To whom should the Bill of Entry (BOE) be submitted when bank has not transferred the payment amount?

The Bill of Entry (BOE) is filed electronically by the customs clearing agent or importer on the ICEGATE portal under the importer’s IEC.
It is not mandatory to submit BOE physically to the bank.
Banks usually require documents like invoice, shipping bill, etc., to process foreign remittance for imports, but in the case of payments via credit cards or PayPal, the bank is not directly involved in outward remittance, so they do not handle BOE documents.
For your case, the BOE remains with the customs department and the importer (your firm) and is filed electronically via customs portals.
You should retain the BOE and other import documents for GST and audit purposes.

Additional Points & Suggestions:

Keep all import documents, payment receipts, invoices, BOE, and shipping documents in the firm's name with GST details to claim ITC.
For imports below USD 1000 via e-commerce platforms, this method is standard practice.
Maintain a clear audit trail linking payment (credit card/PayPal statement), invoices, and import documentation.
Consult your customs clearing agent or authorized GST practitioner to ensure compliance with import documentation and GST filing.
If the bank refuses to accept BOE due to non-remittance, explain that payment was through card/PayPal and provide proof of payment from the card statement or PayPal ledger.

Summary:
Using a personal credit card or PayPal for importing goods under the firm's IEC and GSTIN is acceptable, especially for small-value imports via e-commerce. The banking channel is not bypassed since these payment gateways are authorized intermediaries. BOE is filed with customs electronically and is not typically submitted to banks in such cases.