Once you have started selling online, you come across various terms in relation to taxation like VAT, CST and Service Tax. The main concern is not being from a commerce background, the biggest headache becomes understanding what they mean, how they are charged and what are the exemptions in these. Turning a blind eye to these can lead to penalties and issues related to shipping of products.
Therefore we thought of coming up with an infograph that will make this entire topic very easy for you to understand.
This infograph covers the basic definitions, when to get registered, rates of VAT, CST and Service Taxation
Now that you have gained the basic knowledge for the above, we would also like to add various lists that are important for you to know.
Exemptions In Various Taxation
There are few exceptions in the list of goods that are levied with taxes which are mentioned as follows
Exemptions in VAT
There are various products that have been exempted from VAT whose list is as follows
Items that are exempted from VAT
If you want to know more about how VAT registration is done, you can go forward and rake this resource- VAT Registration Simplified
Exemptions in CST
The various situations in which CST is exempted are as follows
- On installation.(if shown separately in invoice.)
- Commissioning (if shown separately in invoice.)
- Goods rejected.
- Trade and cash discounts are excluded for purpose of calculating CST.
- If goods are returned within 6 months. This time limit does not apply to rejection of goods since in that case there is no ‘sale’
- On outward freight (if charged separately) and outward insurance if property in goods passes to buyer at the time of dispatch.
For reference of what Declared Goods are, you can refer this resource – List of Declared Goods
Exemptions In Service Tax
Items in the Negative list of Service Tax
This blog has majorly covered everything that you as an entrepreneur should know about taxations. Hope it solved your queries and if you are still left with a few, you can always put a comment and let us know and we’d help you out.
P.S: This post was originally written by Divya Sharma Dixit for the Zepo Blog: the E-commerce Blog for Small and Medium Enterprises.