Ecommerce taxation - business to customer model

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This query is : Resolved

Aman Gupta (Querist)

29 October 2014 Hi,

My client is selling on Snapdeal by paying a specified amount of commission on the MRP which includes VAT. Now my client will have to pay VAT on what amount as commission is deducted from his profit as that is going to Snapdeal. Also please explain the TDS liabilities of the seller in the context of payment of commission to Snapdeal on sales.

Thanks & Regards,
Aman Gupta

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

30 October 2014 Sometimes VAT is included in MRP(as in the case of medicines).Then it can be split into actual sale price and VAT.Say,if the MRP of a product is Rs1000-00 and the tax rate is 14.5%,then the price and tax included in the MRP are Rs873/- as price and Rs127 as tax on it.VAT is to be calculated in this way on the total sales and paid to the govt.The price amount is payable to the client of yours.While making such payments a fixed ratio of commission is deducted by M/s snapdeal and the balance is remitted.No commission is to be charged on VAT as that amount goes to govt.Based on the certificate of VAT collection and payment of the same to the govt by M/s Snapdeal your client can claim tax exemption on his sales done through the above agent.....mjk

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