Dear Members, I am quite sure all of you are coming across various sales discount being offered by retailers specially e-commerce. Most of the retailers are also charging VAT on the prices arrived at after discounts on MRP. Since the MRP is inclusive of all taxes and charges, the discounted prices arrived after earmarking discounts also become the MRP and any VAT or shipping charges levied by the retailers amounts to unethical business practices.
For an easy understanding of the issue I am attaching anInvoice of Myntra.com with an analysis establishing that the VAT being charged by the retailer is not only the unethical bust also amounting to evasion of taxes.
Maximum Retial Prices (MRP) are always inclusive of sales tax and all other charges and as per rules, no product can be sold at a price higher than MRP. It is seen that Myntra.com is charging VAT on the MRP without looking into the fact that the prices after the discount on MRP are also inclusive of VAT and other charges. This is illustrated as below from an invoice raised by myntra.com
Invoice No. INV_1503073779_29 dtd. 17/05/2017
1. MRP: Rs. 2199.00
Break up for the purpose of VAT calculation
i) Basic Price : Rs. 2,089.31
ii) VAT @5.25% : Rs. 109.69
iii) Total : Rs. 2,199.00
2. 50% Discounts on MRP: 1,099.50
Since the MRP of Rs. 2,199.00 is inclusive of VAT, any discount offered on MRP shall also become inclusive of VAT in that proportion. Therefore the 50% of MRP shall also be inclusive of VAT on proportionate basis. Therefore
i) Basic Price : Rs. 1,044.66
ii) VAT : Rs. 54.84
iii) Total : Rs. 1,099.50
As explained above, the price of Rs. 1,099.50 is already inclusive of VAT at the rate of Rs. 54.84. Surprisingly, myntra.com has charged an additional amount of Rs. 57.72 as VAT making the total sales value as Rs. 1157.22. This amounts to charging of VAT two times and therefore the additional charging of Rs. 57.72 is unethical. One of the VAT which is already included in the price seems to be getting siphoned off and the business practices adapted by the company are not only unethical but also amounting to evasion of taxes.
The above is an illustration out of an Invoice of Myntra.com but it is seen that the problem is being faced from most of the retailers. more
For an easy understanding of the issue I am attaching anInvoice of Myntra.com with an analysis establishing that the VAT being charged by the retailer is not only the unethical bust also amounting to evasion of taxes.
Maximum Retial Prices (MRP) are always inclusive of sales tax and all other charges and as per rules, no product can be sold at a price higher than MRP. It is seen that Myntra.com is charging VAT on the MRP without looking into the fact that the prices after the discount on MRP are also inclusive of VAT and other charges. This is illustrated as below from an invoice raised by myntra.com
Invoice No. INV_1503073779_29 dtd. 17/05/2017
1. MRP: Rs. 2199.00
Break up for the purpose of VAT calculation
i) Basic Price : Rs. 2,089.31
ii) VAT @5.25% : Rs. 109.69
iii) Total : Rs. 2,199.00
2. 50% Discounts on MRP: 1,099.50
Since the MRP of Rs. 2,199.00 is inclusive of VAT, any discount offered on MRP shall also become inclusive of VAT in that proportion. Therefore the 50% of MRP shall also be inclusive of VAT on proportionate basis. Therefore
i) Basic Price : Rs. 1,044.66
ii) VAT : Rs. 54.84
iii) Total : Rs. 1,099.50
As explained above, the price of Rs. 1,099.50 is already inclusive of VAT at the rate of Rs. 54.84. Surprisingly, myntra.com has charged an additional amount of Rs. 57.72 as VAT making the total sales value as Rs. 1157.22. This amounts to charging of VAT two times and therefore the additional charging of Rs. 57.72 is unethical. One of the VAT which is already included in the price seems to be getting siphoned off and the business practices adapted by the company are not only unethical but also amounting to evasion of taxes.
The above is an illustration out of an Invoice of Myntra.com but it is seen that the problem is being faced from most of the retailers. more
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Oct 31
Dear Shri Brij Gupta Ji, whether the site has written the VAT extra or not is not the subject. Once the product has a tag of MRP, irrespective of the %age of discount, the prices arrived after discounts includes VAT. So whatever the VAT is included in the discounted price is the subject of evasion as no trader is honest enough to pay dual VAT charged. I have illustrated clearly on the inclusion of VAT and in many cases I have ensured refunding of the VAT amount so charged additionally. The post is not a misleading and in fact the traders are misleading the buyers. To exemplify again if a product with MRP of Rs. 1,000/- is offered with a discount of 50% , the amount need to be charged only Rs. 500/- . Any other amount so charged is not only the misleading the consumer but is an unfair trade practice. The consumer has shared a product tag which said MRP Rs. 2,199/-. The refund is not only from one retailer but many have done after the complaints were escalated. I hope I have clarified the doubt and would request for any further query on the subject. more
Jun 09
Virmani ji, my question was - how did you make sure that the price displayed on the web site is inclusive of VAT. If that is ascertained, then what you write is correct. Also again, it shall not come under the perview of evasion of tax until you prove that the vendor has not deposited the tax collected from you whether it is paid twice on the same product or not. As per the bill, the vendor has shown VAT separately and he can not escape depositing it with authorities since his account books are subject to scrutiny. more
Jun 09
Where it is written that MRP is inclusive of taxes? Did the site mentioned the unit price as inclusive of taxes? and if they have charged VAT from you, how can you call it " evasion of taxes". In fact, the VAT charged from you, has to be deposited by the seller to the Govt and he can not hide it and put it in his pocket. Your post is misleading , I am sorry to say that. more
Jun 09
