Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

VAT on shipping charges

1058 views 2 replies

srinivas

founding partner

28 Points Posted on 22 October 2010

I am setting up an e-commerce venture & i have a query on correct method of calculating VAT

My product cost structure is as follows (in Rs)

COGS - 100

Payment gateway charges - 9

shipping charges - 35

MRP - 225

My query is : Do I include the shipping charges & payment gateway charges for calculating VAT ?

thanks.

Replies (2)

suresh

manager

22 Points Posted on 11 November 2010

I think you should not show above charges in in invoice otherwise department may put the tax on this also

thanks

Ravi Prasad

Self employed

148 Points Posted on 16 November 2010

Even if it is not shown in the invoice, the expenses are liable to VAT, if they are incurred prior to the delivery of the goods. Please refer the judgment of the Hon'ble Supreme Court in the recent case of India Meters (Sept 2010). Further, mode of billing doesnot have any impact on the liability of a turnover to tax as per the judgment of the Hon'ble Supreme Court in the case of Hindustan Sugars case.

Hence, first find out whether the expenses are pre-sale expenses and if the risk of the ownership is with the Seller till the delivery of the goods all expenses incurred upto such delivery is liable to VAT.