VAT / CST on Transportation and Minimum Charges

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Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2010 Dear All,

We are selling printing labels in Gujarat and at All India Level.

I want to ask VAT/CST should be taken on which price ? I am explaining as under :

Sales Price is Rs.100
Add : Delivery Chgs Rs. 20
Add : Minimum Chg. Rs. 10
Total Rs.130

Rate of VAT 4%
My question is as under :
Righnow I am charging 4% VAT on Rs.130/- but some of my clients asking for not to charge VAT on Delivery Charges as well as Minimu Charges.

What is your opinion or suggestion in this matter ?

Regards

Aashish Patel

Vishal Kakkad

Vishal Kakkad (Expert)
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06 December 2010 Dear Ashish Patel

As per Gujarat Value Added Tax Act VAT Sec. 2(24) - Sales Price means

Any amount charged by the dealer + Duties under Excise and Other Act + ANY SUM CHARGED ON OR BEFORE DELIVERY OF GOODS.

As you are charging Delivery Charges in the Invoice before the delivery of the goods hence VAT is applicable on Delivery Charges.

Further Minimum Charges are covered by the word ANY SUM hence VAT is also applicable on Minimum Charges.

Hence VAT Applicable on Total Value of Rs. 130/- according to your existing pattern of Invoicing.

If you can provide the the reason and usage of Minimum Charge Rs. 10 Charged, there may be different treatement.

CA. Vishal Kakkad

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