I am a sole proprietorship from Bangalore.
I source apparel ( mostly Trousers ) from Jaipur and sell them to international markets through online platforms and accept payments through paypal.
I started this business 2 months back. Currently , My montly turnover is 40,000 - 45,000 and I expect it to go around 90,000-1 Lakh from december onwards.
Till now, I have not registered anywhere.
Please suggest me what all registrations I need, if any. Also do I need to register for Sales / Service tax or any other tax registration.
Thanks & Regards,
Posted 2 years, 6 months ago by Manish Y
First start with various tax laws that governs the tax system in India.
VAT: Vat is imposed on material sold within state or out of state. You told that you bring materials from Jaipur.
How VAT works in Karnataka: Vat is charged on goods sold within Karnataka, and out of state from Karnataka. Goods sold are to be transported by obtaining E-Sugam number. These E-Sugam numbers are very helpful in transporting of materials (at check-post you have to disclose the E-sugam). E-sugam is required to generate for each sale and purchase (Subject to conditions), however for every purchase from out of Karnataka, you need to have the E-Sugam number.
In your case, since you bring materials from Jaipur to Bangalore. There is a risk of your materials getting confiscated at Check-Post. Though you are not liable to pay VAT on sales (Exports are exempted). Its adviced to obtain VAT registration.
Also, if we read Karnataka VAT Act, 2003. It states, 22(7), Every dealer who export taxable goods is liable to register after the first export and shall report such liability at the end of the month in which export takes place.
Its better you obtain VAT registration.
Service Tax is not applicable, since you are not engaged in provision of services.
Import Export Code: Every exporter need to obtain IEC number from Director General of Foreign Trade (DGFT) before first export (Seperate Provisions for Nepal, Myammar etc.)
So, basicaly you need to obtain VAT registration and IEC code.
However these views are based on the limited information provided above and are general in nature, without understanding the nature of business and nature of transactions involved.
Posted 2 years, 6 months ago by CA Pulkit Sharma
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