VAT efiling for e-commerce businesses
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.
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!
Interesting, in short you need to charge vat in invoices and pay to government.
Long, will reply soon as I am on mobile.
As per section 4 of Karntaka VAT Act (I believe you are operating from Bangalore), every dealer who is registered under section 22 or 24 shall pay the tax on taxable turnover. Your registration is under section 22 (Interstate trade).
Since you are registered under section 22, you need to charge VAT and pay to government. Regarding not charging VAT to customers, I believe invoices raised by Amazon and Flipakrt include the VAT portion in bills.
Normally they pay you amount collected from customer minus their commission. You have to calculate vat on invoice amount and pay.
Regarding, turnover below exemption limit - This does not apply when you have interstate trade. Registration is required from the first sale/purchase out of local state.
Yes, you need to mind your margins and consider the chargeability of VAt.
Regarding, CA and professional services, I believe you are right person to judge as a client. Fees should never be a factor to judge. Big Four firms may charge you more than your turnover for the same work. Professional fees depends on the expertise and cost incurred by professional.
You can learn how to file vat returns and do it yourself. Believe me its very easy and for any help Tikshare is ready to help you.
Feel free for any further doubts.
Thank you for your advice Pulkit.
I will start charging the VAT from customers and pay it to the Govt. moving forward.
I also am at cross-roads in business for which i further need advice.
My online-selling business is essentially a partnership firm registered in karnataka.
I am moving to Pune next month and my partner and I have decided to dissolve the partnership and I will be continuing as the sole proprieter.
1.what are the repurcussions of the move?
2.What all steps do i need to take before i leave to ensure I can smoothly operate from Maharashtra?
3.Can i operate as is and keep paying tax to Karanataka Govt. even though il be operating out of Maharshtra?
4. If not, how do i de-register myself in Karnataka and register in Maharashtra? Will i get the refund of Professional Tax paid?
5. Can i show it as a branch of my main office in Pune? If yes, do i still need to register for VAT/CST in Maharshtra?
Please note, i do not have a physical store and do not plan on having one. Its all online selling.
VAT is state specific. If you have a branch in Karnataka from which you will be selling, you need to have registration in Karntaka otherwise it is not required.
Once you move to Maharashtra, you have to take VAT registration in Maharashtra.
Regarding partnership, if you are dissolving partnership surrrender your vat registration Karnataka.