Online Selling at marketplace of ecommerce sites - Business & Economy - Entrepreneurship - TIK Share

Online Selling at marketplace of ecommerce sites


R Sharma

2014-12-03

Could you please advice in this scenario:

We (me and mywife) are thiniking to become a SELLER on the indian ecommerce platforms like snapdeal ,tradus etc..
we plan to sell ladies dress materials on the marketplace of the existing ecommerce platforms.

Have seen that some of the sites allow becoming a seller by just providing adress proof, pan and bank account,
while some ask for TIN, TAN , Company name etc.

After trying to read articles on internet on 'Process of selling online' I understood most of them are listing the process
of an already existing firm/shop/company/retailer (who has TIN, VAT etc.) to setup and online store or become a seller by paying fees to the online sites.

My question is little different:

We are individuals and want to start from Home taking small steps. we plan to get some dress materials in wholsale and retail as a seller on online marketplace by paying their fees .

The doubts are:

1) Do I need to register a Propreitorship firm ? If yes in whose name , wife or self ( I am in job in Pvt sector, will it be legal)

2) We do not have a commercial Store so will have to register on home address (Flat) . Is that possible ?

3) Do I need to get TIN, TAN ,VAT etc ? All or any one of those
4) Read somewhere if the sales is less that 5 lacs per year there is no need to register with sales tax .
5) Can't we just register and sell until we reach the threshold to register for sales tax. By then we will know we are making some profit or not and can bear the
expenses of a rental place to open a shop and then register on that commercial address.
6) is a current account needed as an individual cannot get current account?

I have these bits and pieces of information. If you can help we may take a step further in this regard.
I feel if we need to register ,the major hurdle for us would be we do not have a commercial space. Is there a way out?

Thanks in advance
Regards

CA Pulkit Sharma

2014-12-03

Hi Sir,

With reference to your doubts please find the advice subjected to limited information provided.

Do I need to register a Propreitorship firm ? If yes in whose name , wife or self ( I am in job in Pvt sector, will it be legal)

There is  nothing called proprietorship registration. You can obtain shops and establishment registration if required and also trade license from your local municipality office.

We do not have a commercial Store so will have to register on home address (Flat) . Is that possible ?

Registrations are always to commercial premises.

Do I need to get TIN, TAN ,VAT etc ? All or any one of those?

Yes depending on whether you trade within Karnataka or you also sale outside of state. Registration provisions are explained in article Registration provisions under Karnataka Vat Act. If all your sales are within state you may register after your sales cross 5 Lakhs.

However practically, since sites will receive orders from all over India, your sales will not be limited to local sales. You need TIN registration for selling online, however i dont think any of the portal allows seller registration without TIN due to this difficulty.

This is also for your point 4. Limit is 7.5 Lakhs now. But in your case you will selling out of state too, so this limit does not apply once you sale out of state.

Is a current account needed as an individual cannot get current account?

Individual can open the current account. Banks will open current account after TIN registration since they need proof of business.

Regarding requirement of commercial space, sorry but you cant register if you dont have a commercial space. Practical it can be done, but legaly its not correct.

Reply

R Sharma

2014-12-03

Thanks Pulkit,

Looks like marketplace is for established retailers and individuals cannot get in. Also the market is exteremely competitive and there is profit sharing.  Not for individuals I opine.

-RS

Reply

CA Pulkit Sharma

2014-12-03

No its not that e-commerce is not that individuals are casted out from E-Commerce race. They are equally part of it.

I have clients selling online through marketplaces. If you have products to sell, no one is going to stop.

If you see a good margin and demand of your products, i dont see any hurdle in starting your venture.

May i please know, what exactly made you think that online selling is for big guys?

Reply

CA Pulkit Sharma

2014-12-03

No, its not that individuals are casted out from E-Commerce race. They are equally part of it.

I have clients selling online through marketplaces.

If you see a good margin and demand of your products, i dont see any hurdle in starting your venture.

May i please know, what exactly made you think that online selling is for big guys?

Reply

R Sharma

2014-12-03

Well , as you said, it will require a commercial space and registration for  TIN which a mom and pop seller might not be in a position to invest/get.

 

Reply

Rahul Rai

2014-12-03

Well its all theory. Pulkit being a professional will not tell you directly. But let me tell you what lot of people do practically.

Ask your friend or someone who can give you shop for ten days, apply and take registration. Once registered, do business from wherever you want.

Reply

Rahul Rai

2014-12-26

Did you get the TIN registration done? Or thinking to cancel the project?

I dont think difficulty in getting TIN should be a major issue to not start your venture. This is entrepreunership bro and you have to face these challenges.

Read this Being Entrepreuner and facing the challenges within!!!

Reply

Bapooji Rao

2014-12-29

Hi Mr.Sharma,

As per Pulkit Sharma's advice & sharing knowledge and advice given by Mr.Rahul Rai hope you would have got registered and started selling.

 

Wish you all the best.

Reply

R Sharma

2014-12-29

Not Yet, I am still understanding. Did meet few sellers of this platform.. I understood that you need to have a commercial shop running , the market places can only be an additional channel. I even got to to know that one guy had listed 1000 items and got a sale of 50 in last 2 months. where as he sell 10 times more from his physical space. So selling only on MP may be depressing wrt to inventory stocks sitting your head and not selling.

The reason is competition . there is a very bad rat race out there also the margins are very very thin. with packaging cost and listing fees and MP share its only for the people who manufacture things or get at a very cheap wholsale rate can compete. It can only be the BIG guys who make profit. Others are just have numbers to show.

Still I feel there is an opportunity , haven't given up.

Thanks.

 

 

 

Reply

Rahul Rai

2014-12-29

All the best for your venture. Yes business is all about competition and beinf different in terms of cost and quality.

Online Selling at marketplace of ecommerce sites

Reply

CA Pulkit Sharma

2014-12-29

I hope this was really a good discussion thread and from long time i have been writing on practical difficulties faced while doing business in India.

Debut can be raised and should be, Government is doing its job but due to federal structure of India; implementing a new law is very time consuming.

GST would put an end to mis-management laws and a federal system will be in place. Problem with VAT laws is that each state has their own and rules too are different.

For example, taking VAT registration in Karnataka is very time consuming compared to Chhattisgarh and other states.

GST is a hope to bring the indirect taxes under same administration and simplifying the tax laws.

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R Sharma

2014-12-29

Yes Pulkit, 

Taxation is another issue, I heard the ecom sites are asking to levy local VAT instead of CST for interstate shipments and seller have apprensions of shipment being witheld by authorities .

There is confusion of what tax to levy for product sale going outside of state but payment received from ecom offices locally. 

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Rajiv kumar

2015-02-21

Hello Mr. Pulkit Sharma,

I have a similar requirement but I am looking for manufacturing my own clothing line under my brand from fabrics obtained from wholesale, and since I am looking for the online channel as well, I shall have to register as a retailer as well. I am going to start with a niche market, concentrating on designs suiting a particular market segment. Concerning the legalities of starting a new clothing line I have these questions:

1. As I understood from this forum that I will have to register for VAT/CST. Is it necessary to dispatch the product to customer from the state of registration? (As the quality inspection and inventory management may happen in some other state, not where the product is manufactured). Is there any VAT/CST benefit for small business?

2. As I understand I shall have to pay exise duty as well. How do I have to register for paying excise? Are there any exemptions of excise for small and medium business? 

Thanks,

Rajiv

 

 

 

 

Reply

CA Pulkit Sharma

2015-02-21

@ Rajiv Kumar

1. Lets understand how the VAT works and when you have to charge VAT. But before that, lets try to understand the business model of yours.

You will buy fabric and then design and manufacture. Once manufactured, you will sell your products to buyers from all over India through online portal and offline.

Based on this information, here is how vat will work.

You have to charge VAT in the invoice you will be giving to buyer. For example, if your buyer is from Haryana and you selling from your Bangalore office, you have to charge VAT/CST in the invoice (This is for retail customers).

CST/VAT rates will be equal to vat rates applicable to your local sales.

Next, what if manufactured in other branch and sale is made from another branch?

In this case, you do not have to charge VAT on manufacturing. You will be transfering stock from manufacturing branch to selling branch.

In this case you have to rise the transfer note and obtain the applicable forms to transfer the stock. Also there are certain forms that you have to get under CST act.

You can charge VAT to customers on invoice raised from selling branch.

2. Excise

Excise is charged on manufacturing activities. Since you will be manufacturing, Excise is applicable. For small manufacturers excise exemption is provided. You can manufacture without registration upto manufacturing activities of 1.5 crore Rupees.

Please note that the above advice is based on the limited information provided. The advice may change based on further information.

Please consult professional before taking any action based on above advice since there are more questions which you need to answer before we can reach on a solid opinion.

Thank you

Feel free to ask further.

Reply

Satish Nerlekar

2015-03-22

Hi All,

What If I register with some commercial space address and later i start doing business online(snapdeal, ebay like sites) without any store. Is that leagal?? or I hav to sit in shop and sell my products. 

If I can get registered as Rahul Rai said, later are there any inspections to check commercial space??

Reply

Rahul Rai

2015-03-22

Hi Satish,

If you selling a product, you need to have a space to store your products. These products may be stored at warehouse of Flipkart or Amazon etc. or kept at your shop. You need to register under VAT to trade and wherever you keep your products, that place should be registered as your branch.

It is not possible to do business without owning a office, if you sell only online and products are never seen by you in that case you are only a commission agent and you need to register as commission agent. Even in that case the original registered place or new place should be occupied by you.

Inspection is not done very frequently but it is done and prior information is not provided. If you are lucky you may scape the inspection.

General people from VAT office buys something from you and check whether you are issuing VAT invoices. All communication including notice is sent to your registered place.

If you are thinking for long term avoid this but if you want to test go for it.

Reply

SAMREEN ARORA

2015-04-15

Hi Pulkit,

I have been selling on Amazon.in for a year now and now starting on flipkart and snapdeal soon. Its a partnership firm with all VAt/CST registration, Pan no. and TIN no. in place. 

We have been paying VAT for the last 2 quarters through our CA which eats up into our profit as our turnover is less than 7.5 lakhs. The only reason we registered was because we had to sell online.

Now recently i met another CA who told me that i did not need to pay VAT since my turover was less than 7.5 lakhs. Reason being that I am not collecting any VAT online from customers. He also said that since we have registered, online VAT filing is complusory now, but just enter tax payable as NIL every quarter.

I double-checked with my CA, who said that once u register, u need to FILE AND PAY, irrespective of whether ur turnover is 7.5 lakhs or not. I understand the filing part, as same goes for Income Tax also, whether tax payable is NIL or more. But what i don't understand is why should we pay if our turnover is less than the threshold. Is that not unfair? or is he taking us for a ride? He has been charging exorbitantly for filing the VAt return online, which now im trying to learn to do myself.

Please advise. 

Also, if we do have to pay VAT, does that mean we need to revise our online prices to charge the VAT from customers also?

Thanks in advance!

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