I am starting an online shopping portal in India. The company is registered in Tamil Nadu state in India. What are the sales tax obligations if i deliver products to customers outside of Tamil Nadu?
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Is it sufficient if i pay sales tax in Tamil Nadu for all sales (Tamil Nadu and Non Tamil nadu customers ) or do i have to pay sales tax to other states.
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Answer:
Though I am no tax expert but from whatever little knowledge I have I am trying to answer your question. You will neither be paying Tamil Nadu or any other state. Sales Tax or CST ( Central Sales Tax) is a tax that you pay to the Center. It is not a state based tax. You will have to pay this to the center once for every sales transaction. However different states might apply Entry tax etc. Please also note that you should contact a C.A. to discuss this in detail. There are other complications that you need to worry about. For example - If you are selling grocery, you might have to pay sales tax on the sales of goods and service tax on the home delivery service.
Harish Agrawal at Quora Visit the source
Other answers
Whether the tax laws would be applicable to your startup is dependent upon the business model you intend to operate. If you see the business model of top e-commerce giants in india and worldwide, they operate on the market place model , where they just provide an online platform where buyers & sellers meet. They accept registrations from the sellers to list their product on the website & likewise they attract buyers based upon the portfolio of the products listed on their website , discounts & promotions. Here the online shopping portal is just acting as a bridge between the buyer & the seller. The portal is neither buying goods nor selling it.Its just providing a platform where the trade can take place. All the risk & the rewards that are normally associated with the sale of the goods lies with the seller & not with the buyer. Revenue comes from commission that is charged by the portal to the seller, which is generally a percentage of the sales. In this model , the portal is required to pay service tax only as it is providing the service of providing a market platform. No sales tax or CST would be applicable in this case 2) Trading Model In this case , the portal acts as a reseller , wherein it procures goods from third parties , stocks the same in its warehouses & accordingly sells the same to the buyer via its online shopping portal. In this case VAT , CST , Service Tax all would be applicable since here the portal is acting as a trader. I Hope that answers your query ! :)
Anurag Jagnani
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