Starting an installment company for selling goods
I am planning to start an electronics store where I want to sell the products through easy installments rather than upfront payment.
The price of the product varies based on the length of installment but it will be still less than the MRP.
Is this legally allowed in India. If it is, is there are governing laws related to this.
Asked 2 years ago in Business Law from Bangalore, Karnataka
1) you are free to sell your electronic products on instalments
2) most electronic stores allow payment in easy instalments
3) you would be governed by provisions of the contract act
4) enter into agreement with the purchaser to protect your interest . Take post dated cheques
5) in the event of default in making payment and cheques are dishonoured file complaint under negotiable instruments act
6)contract should contain a clause that you can take possession in event of default in making payment and auction the same and sue for recovery of balance amount
Yes, thus us very much legal.
It requires compliance of no special law. Standard registration under VAT, Sales tax and obtainment of Trade License will do.
1. This would be perfectly legal under the Indian legal framework.
2. Sole proprietorship, which can be commenced with nothing more than a current account, would be ideal for the business which you wish to start. There is no registration required for a sole proprietorship.
3. You require a license under Shops and Establishment Act as you would be stocking the goods.
4. The online payment gateway has to be one which is approved by RBI.
There is nothing wrong in operating a business in any manner which is not considered illegal in the eyes of law. You have obtained proper permission from Municipal or Corporation authorities for running a business and had been observing all the legal formalities like employees roster, and other requirements by law, so this cannot be considered as illegal in any law. Matter of fact it cannot be considered illegal to sell the product on easy instalments for a price a little above MRP too.
1. There is no legal restriction in your selling goods in instalments,
2. You shall have to draft an agreement for sale in instalment otherwise there may be several defaulters,
3. When there is a risk of non-receipt of payment and also interest on the unpid amount, how your final price will be less than the MRP,
4. However, make sure that you have made appropriate commercial calculations about your said project of selling items in installments below MRP.