Is VAT applicable on the following examples?
I run a pet products store online. As of now I am taking into account VAT for all sales that i make. I don't technically add any value to some of these products. Looking for advise on the following 2 scenarios, on whether I should be charging VAT or not:
I am running a social initiative in the city, by bringing earthen bowls in bulk from potters and making them available to people at low prices. I have almost zero profit here. Should I be taking VAT into account? The bowls are sold exactly the same way that they are bought. I haven't modified them, i dont package them, i don't ship them.
If i am buying shampoos from another supplier/brand and selling them in the same state (with the original branding intact), should i be taking VAT into account. The supplier is not VAT registered and isnnot liable to charge VAT due to very low sales volume as of now. The shampoos would be bought at 400 and sold at 500. Please advise
Asked 2 years ago in VAT from Bengaluru, Karnataka
From the fact mentioned above , you are a traders . The Karnataka VAT law will apply to you . There is a threshold limit of turnover and if you cross that you have to charge VAT as per the applicable rate mentioned in the schedule .
The tax rate has to applied item wise item .
However there can be composition scheme under which you can charge the lower rate of tax if you purchase within state.
In the earthen pot , please check the schedule and i think it should be tax free . ( please check ) . On the shampoo there can be VAT liability . However as said above please check the turnover threshold and/or the composition scheme under the law .
we are Delhi based CA and if require you can contact our banglore associate for more details. we can be contacted on - firstname.lastname@example.org
CA, New Delhi Area, India
Thank you for your inputs Prakash. Makes it clear.
About the pots, yes they are purchased from within state (Karnataka). Where do i check the schedule to see if this is tax-free??
Asked 2 years ago
Please check the Karnataka VAT Act and the schedule appended there to along with the amendment if any .
CA, New Delhi Area, India
In both the cases, VAT would be payable if your turnover exceeds the threshold limit.
For VAT Rates, kindly contact local VAT professional or VAT department or you can view VAT Rates schedule online on the respective VAT site.
For any other query, feel free to contact:
I assume that you are from Karnataka and as VAT is a state bound law so it is preferable if you consult an expert from your state as he may be able to guide you in a better manner.
Trust this clarifies your query.
Feel free to get back/ call back for any further clarifications.
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP