Vat & e commerce

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Priyanka Mahajan (Querist)
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03 July 2012 Dear Experts,

my company is in online sale of garments in delhi. In its case, it would take order online and vendor (may be outside delhi) will directly ship the goods to clients from ma company behalf. What would be the sale tax implications?

kaushal garg

kaushal garg (Expert)
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14 July 2012
If you sale & ship the goods out of Delhi,tax to charged for CST Sale at the rate of vat in delhi means buyer is unreg.

Kaushal Garg
9213157055

Priyanka Mahajan

Priyanka Mahajan (Querist)
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14 July 2012 But i am not shipping the goods, it will be directly shipped by my vendors at ma customer places. In reply to my answers from one of ma professional friend, i will have to charge VAT in case of my vendor and my customer from the same city as the goods are moving in the same state and i will have to charge VAT as per my vendor state VAT. Now the question, if this will happen, whether i need to register maself in all ma vendor states. If no, then how will i pay VAT so collected.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Great question! Here’s a breakdown of VAT implications for your e-commerce model in Delhi where your vendors ship directly to customers:

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### Key points:

1. **Sale origin and VAT liability:**

* You (the principal seller) are making the sale to the customer.
* The goods are dispatched directly by vendors (your suppliers) to customers.
* The movement of goods happens within the same state or interstate depending on locations.

2. **If the goods are shipped within Delhi:**

* This is an intra-state sale.
* VAT is applicable based on the *place of supply* and registration.
* If your vendor is outside Delhi but shipping to customers in Delhi on your behalf, the sale is considered as made in the vendor’s state.
* You may need VAT registration in the vendor’s state if you have a *business presence* or significant operations there.
* Alternatively, your vendor charges VAT at their local rate to you (the principal), and you charge VAT on sale to the customer in Delhi.

3. **If goods are shipped outside Delhi (interstate sales):**

* CST (Central Sales Tax) will apply.
* You charge CST on sale to out-of-state customers.
* CST is usually charged at 2% (if Form C is obtained) or 5% without Form C.

4. **Registration requirements:**

* If your business has a physical presence (warehouse, office, inventory) in other states where vendors ship from, you need to register in those states.
* If no physical presence, generally you do not need to register in vendor states.
* But if you have taxable operations or inventory in vendor states, registration is mandatory.

5. **Collecting and paying VAT:**

* VAT must be collected based on the place of supply rules.
* If goods move within Delhi, VAT is payable to Delhi VAT authorities.
* For interstate sales, CST is payable to the supplier’s state.

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### Recommendations:

* **Clarify contractual roles:** Ensure your vendor invoices and tax documents clearly state whether you are the principal or the vendor is making a sale directly.
* **Consult state VAT laws:** Since VAT laws differ slightly across states, check registration and compliance obligations in each vendor state.
* **Maintain documentation:** Keep records of shipments, invoices, tax payments, and customer locations to support tax filings.
* **Consider GST:** Since GST replaced VAT & CST in India from July 2017, if your operations continue today, you would follow GST rules. But since your question is VAT era (2012), the above applies.

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### Summary:

* If goods ship **within Delhi**, VAT applies and you might need Delhi VAT registration.
* If goods ship **interstate**, CST applies; you must charge CST on interstate sales.
* Registration in vendor states depends on your physical presence or business activities there.
* You pay VAT/CST to respective state authorities accordingly.

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If you want, I can help draft a checklist for VAT registration & compliance in multi-state e-commerce setup or explain how this transitioned under GST. Would you like that?

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