Vat on discounts

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This query is : Resolved

Ashim Dasgupta (Querist)

06 July 2012 I want to know if a franchise of a footwear brand can charge VAT separately on the MRP wherein it is mentioned on the shoebox that the price is inclusive of all taxes.

And if the brand offers a discount, can it charge VAT on the discounted price in the above scenario.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

07 July 2012 Mr Ashim Dasgupta,
In fact, when it is labelled as 'MRP xxx inclusive of all taxes' on the pack, the seller should not charge vat on the MRP and collect in the invoice.This is an instance of cheating the consumers and a case can be filed in a consumer's court against the dealer. The VAT laws of any state do not specify as how much a dealer should charge while selling certain goods.For whatever value a product has been sold vat is to be colected at appropriate rates(even discounted prices).
....MJK

Ashim Dasgupta

Ashim Dasgupta (Querist)

09 July 2012 Sir, now a days big brands offer discount and then charge VAT on the same. For example, if the MRP inclusive of taxes is say Rs 3000, then the company charges Rs 3000 from its customers. However if it offers a 20% discount i.e. the new new price being Rs. 2400, then they are charging VAT @ 13.5% on Rs 2400.
Is this allowed. This is a growing practice among big brands like Louis Philippe and Pantaloons.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

09 July 2012 Mr A Dasgupta,
Yes, it is allowed and it is corect also....MJK

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