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Cst on mobiles sold online from karnataka

LNP Traders (Others) (37 Points)

02 July 2015

Hello Experts,

We are procuring mobiles from Karnataka and selling (thru' ONLINE websites only) across INDIA.

While selling within Kanataka, we will have to pay the difference in VAT (output - input) to the State govt.

Whereas, if we sell to a customer located outside Karnataka; what should be the CST %

Kindly advise.

Thanks,

LNP Traders

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16 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 02 July 2015

Rate of CST will be the @ VAT as applicable for local sales. For eg: if u r selling mobiles phone in KA @ 5.5%, then CST also will be @ 5.5%. Since u will be selling to end customers, C forms will not be applicable in this case I think.

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LNP Traders (Others) (37 Points)
Replied 02 July 2015

Firstly, I appreciate you effort in responding to my query.

Now my question is, in Interstate Sale (of Mobile Phones)

Procurement Rate - 10,000 [ Price - 9479 | VAT @ 5.5% - 521 ]

Sales Rate - 12,000 [ Price - ???| Snapdeal Charges - 730 | Shipping - 70 | CST @ 5.5% - ??]

Should I calculate CST on 12,000 or after deducting charges and shipping which is 11,200.

Kindly advise.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 02 July 2015

As I understand, CST is not applicable on shipping (freight) charges if such amount is shown separately in the invoice. But I think snapdeal charges cannot be deducted (but not very sure) for computation of CST.

LNP Traders (Others) (37 Points)
Replied 02 July 2015

Ok thanks.

Intrastate (within Karnataka) sale : Output VAT - Input VAT is payable to Government

Interstate sale : Output CST - Input VAT (is it possible by any means)

If not, it's like we are being restricted from selling outside Karnataka.

Kindly advise.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 02 July 2015

Yeah, u r right... u will be restricted... no option to avail credit against interstate sales till GST is implemented.

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Ashok J (CA Final) (880 Points)
Replied 03 July 2015

Hi.....If LNP Traders are located in karnataka, you will pay input vat on purchase of mobile phone. you can take input credit. if you sell within karnataka, you will charge VAT, outside karna - CST. In both the cases input VAT CAN BE ADJUSTED against output VAT/CST...because both are going to same state govt....n CST rate applicable is 2% and not 5.5%.

Ashok J

Bangalore

Ashok J (CA Final) (880 Points)
Replied 03 July 2015

IF LNP TRADERS is located in some state other than karnataka, you will pay CST on your purchase cannot avail input credit...if you r selling within your state, charge VAT, outside your state charge CST..there is no set off...

Hope its clear....

As regards snapdeal charges and shipping, pls contact an expert..

CMA Poornima Madhava (CMA) (13112 Points)
Replied 03 July 2015

I answered from purchaser's view for restriction. As a seller u can adjust input Vat against both local or interstate sales, as already said by ashok. @ ashok: do u mean to say cst will be 2% for mobile phones even if sold without c form, when the local Vat is @ 5.5%? If so, how?

LNP Traders (Others) (37 Points)
Replied 03 July 2015

Ok let me rephrase my question.

As a seller (I procure only from Karnataka) and while filling VAT with Karnataka Commercial Tax Department:

Intrastare Sale (VAT)

- I should pay the difference between Output & Input VAT to the Tax department

Interstate Sale (CST)

What should I pay to the Commercial Tax department:

i) The whole CST amount that's mentioned in the bill

(or)

ii) The difference between Output CST and Input VAT

Please advise

CMA Poornima Madhava (CMA) (13112 Points)
Replied 03 July 2015

You need to pay only the difference even in case of interstate sales (i.e. output tax (CST) - input VAT), provided u have sufficient input VAT credit for adjustment.

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Ashok J (CA Final) (880 Points)
Replied 04 July 2015

CST is 2 % only agnst c form....else 5.5

ashish (article) (151 Points)
Replied 05 July 2015

Book Itc on only the purchases you have made from karnatka.....Thereafter when phones are sold then first priority to set off itc is against output vat liability(i.e. Sale done in karnatka) and if thereafter you have any credit of itc after setting off vat.......then you should set off such balance itc against your cst liability...............In relation to cst rate you have to charge rate of 5.5%(if sale not against c form)............2%( in case sale against c form) as appropriately said by mr.Ashok and Ms.Poornima

ashish (article) (151 Points)
Replied 05 July 2015

And yes of course ....cst Will be charged on 12000(i.e. Including all exps i.e. Snapdeal charges also.. )..........basically sales tax(i.e. Vat &Cst ) are charged total value..The regime of vat is to tax the person on any value addition by him......Here value addition incl..all exps and your profit margin....since after payimg snapdeal charges you are earning appropriate margin.........Hope the informatiom will be helpful to you

LNP Traders (Others) (37 Points)
Replied 05 July 2015

Thanks Mr Ashish ! It was really helpful

An additional question :)

Assuming that I've made purchase worth Rs 2,00,000 in June 2015; whereas I've sold only items worth Rs.20,000 at Rs.30,000 during the same month

Hence, my ITC ( @ 5% VAT for ease of calculation) is worth Rs.10,000 and Output tax is Rs. 1,500.

In this scenario, the difference between output and input tax (10,000 - 1,500) 8,500 should be claimed from the department and got into my account during 20-Jul-15 VAT filing or will that be with the department and set-off during the sales in the subsequent months.

Please advise