TaxTMI 
TaxTMI 
Taxes involve in selling NGO products
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....axes involve in selling NGO products<br> Query (Issue) Started By: - Ashish Chadha Dated:- 28-3-2016 Last Reply Date:- 30-3-2016 VAT + CST<br>Got 7 Replies<br>VAT / Sales Tax<br>Hi, I have 02 questions related to the services which our organization is providing to NGOs as social service. * We are selling the products which are manufactured by registered NGOs through our organization website (b....
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....ased in Delhi). Please let us know what all taxes will be applicable to our organization as we are not making any profits on any of the product (VAT, Service Tax, etc.) * We are also taking online donations on behalf of NGO and forwarding the complete amount to their accounts. Do we have the authority to do the same, if yes then should we deduct any amount as taxes from the donated amount before....
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.... transferring the same to NGOs account? . I will wait for your reply. Thanks & Regards Ashish Reply By Ganeshan Kalyani: The Reply: Sir, before I answer your query please let us know what is the legal status of the NGO, whether it has got registered under VAT/CST ? Reply By Ashish Chadha: The Reply: Hi, Thanks a lot for your prompt reply. To answer your question, I think 60% of them who ar....
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....e medium & big are registered under VAT/ CST but rest 40% don't know about these technicalities. So they are registered as NGO but not in VAT/ CST Reply By Ganeshan Kalyani: The Reply: Sir, the model in which you are operating the transaction is same as that of 'E-Commerce' (in short 'e-com' business. There are various model in e-com business. The one is providing a platform ....
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....for the suppliers products like online website through which orders are received, sale takes place and collection is done by the e-com. In exchange to this activity a commission is charged by e-com, who is liable to pay service tax on such commission received. Here in your present case the activity is similar to the above mentioned business model. Further, as per Central Sales Tax Act, the per....
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....son who receives goods from another assesse and does selling activity on his behalf it would be deemed to be an authorised agent of the main supplier of the goods and VAT is liable on such transaction. Thanks. Reply By Ashish Chadha: The Reply: Hi, Thanks a lot for the information. It will be of great help. To conclude it means we are liable to pay CST or VAT for NGO products (whether they ....
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....are registered or not) which we are selling on our Ecommerce website. Also, please share your view on the donation part and how can we take rebate while filling income tax as we are into the selling of NGO products. Thanks & Regards Ashish Chadha Reply By Ganeshan Kalyani: The Reply: Sir, if an entity registered under Section 12AA of the Income Tax Act as a charitable institution and does an....
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....y service for the betterment of General Public then such services are exempted from service tax. Referral Notification is 25/2012-ST. Your entity I guess is not registered as NGO nor it does undertake any activity as charity. Thus the activity of collecting of donations and transferring it to another entity is a service and service tax may be levied. But since there is no profit elements charging ....
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....service tax would be questioned. Pure Agent concept may help you to some extent but litigation may crop up. Further I am of the view that you will be subject to income tax queries. This is because the time period between collection of donations and transfer of money to NGO the funds lying in your account would yield some bank interest which would turn out to be your income. Thanks. Reply By Ash....
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....ish Chadha: The Reply: Hi Ganeshan, Thanks a lot for the information. I think we need to work on our processes as we don't want service tax to be deducted from donations. Once again thanks a lot. Reply By Ganeshan Kalyani: The Reply: Welcome Sir. Thanks.<br> Discussion Forum - Knowledge Sharing ....