VAT/CST for readymade apparels

[Asked by Guest]

Hi All,

We are planning to start online e-commerce portal where we will be selling -

1. Un stitched Women's Apparels

2. Stitched Women's apprels

3. Imported Greeting Cards(Paper Product)

All these products will be supplied from exporters/distributors in Surat or Mumbai,we buy from them in catalog price and selling them on our portal.

My question is:

1. For these kind of products what VAT/CST Rate will be applicable(Ecommerce portal registered in west Bengal)

2. Do we need to provide retail invoice to customers

Please help in this case.

[Ganeshan Kalyani]

E-commerce taxation:
It is a fact and boon that the advancement in IT industry have paved a way for online business like Flipkart, Amazon etc. How the taxation is challenge for such business to the assesse as well as to dept. Discussing further about the methodology adopted by business to cater e commerce business. There are four methods in which the transaction is generally carried out.

First the Flipkart (for understanding) will buy and stock the goods with them. Then on receiving order from customers online it is sold by invoicing first from supplier to Flipkart and Flipkart to customers.

Secondly the Flipkart doesn't buy and stock goods with them. They just inform the supplier on receiving order and billing is done by suppliers to customers. Flipkart just receives commission.

Thirdly Flipkart doesn't buy and stock goods but on receiving order it immediately places order to suppliers. Suppliers invoices to Flipkart then Flipkart sells it to customers and Flipkart invoices to customers.

Fourth Flipkart acts as an agent that is suppliers adds Flipkart as additional place of business and selling is done by supplier and Flipkart receives commission.

It is very interesting to know such methodology. Future e business will play and prominent role in development of the business world.....

The above is for your understanding. I shall answer your query shortly. Thanks.

Thanks.We are planning to work on third method.

Awaiting your kind help in this case.

[Ganeshan Kalyani]

Sir the taxation on e-commerce is not so easy, however I have tried to give my views as under:

1) You are based at West Bengal and purchasing from Surat or Mumbai, this transaction is a Interstate purchase and CST@2% will be charged on invoice by your suppliers. You will have to issue Form C to them, in absence of the form full tax applicable for the product purchased will be charged by your supplier on invoice.

Subsequently when you bill to your customers at various states it will again be interstate sale for you and you will have to charge CST@2% to your customers and your customers will issue Form C to you. In absence of the form you will have to charge full tax applicable for that product. The CST so collected shall be deposited by you to the Gvt and VAT/CST returns have to be filed by you as well.

2) You have purchased goods from your supplier against Form C@2%, the goods left from his premises to be delivered it to you. Before the receipt of the goods you received order from your customer and you endorse the LR copy to your customer address. This type of transaction is called InTransit Sale. Here your customer will issue Form C to you and your supplier will have to issue Form E-1 to you. You will invoice to your customer and supplier has already invoiced on you.

To continue. ...

Hi..

Thanks!I got a good understanding of the concept.Please help in following-

1. In case of non availability of FORM C, "you will have to charge full tax applicable for that product".Can you please let me know what tax rate needs to be applied for following products-

1. Un stitched Women's Apparels

2. Stitched Women's apprels

3. Imported Greeting Cards(Paper Product)

As,we can provide FORM C to supplier but in very rare case customer who buy product online will be providing FORM C to us so we have to charge full applicable tax.

[Ganeshan Kalyani]

The VAT rate on the mentioned products may vary from State to State. Hence you will have to check the respective State's VAT Schedule entry. Thanks.

AI Summary

Interstate sale taxation: concessional central sales treatment requires Form C; absence mandates charging full state VAT.
Interstate supplies through an e commerce operator are taxable under central/state turnover taxes: concessional Central Sales Tax treatment requires purchaser production of Form C; without it the seller must levy the full state VAT rate. The operator's fulfilment model determines invoicing and tax incidence. Sales dispatched from supplier premises to customer addresses before receipt by the operator constitute in transit sales and require accompanying supplier transport/invoice documentation and customer Form C to claim concessional treatment. VAT rates for apparel and imported paper products depend on each state's VAT schedule, necessitating verification and proper invoicing and returns.