• Sale of garments

I am setting up an online company that will sell garments under my brand name. I have contracted a manufacturer in Bangalore who will manufacture the product for me. What is the total tax (cst gst excise sales vat etc etc)? 

Assume the product is manufactured and sold to me by manufacturer at Rs 100 (pre-tax). What is the total taxes?

Assume the following two situations - 
1. I get the garments shipped from Bangalore to Delhi for warehousing and then sell to customers across India
2. I get the garments shipped from Bangalore to Bangalore for warehousing. I then sell to customers across India.
3. I get the garments shipped from Bangalore to Delhi for warehousing. I then sell to customers in USA and Europe.

Please explain clearly. Please answer all three questions. Do I need to register my company for VAT or anything ? As of now I only have registered PVT LTD with bank account and PAN card.
Asked 7 years ago in Business Law

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1 Answer

VAT deals with intra-state trade and CST deals with inter-state trade. VAT is a form of indirect tax imposed only on goods sold within a particular state, which essentially means that the buyer and the seller need to be in the same state

2) since you are selling garments interstate CST would be leviable

3) Sec.6 (1) of CST Act provides that every dealer shall be liable to pay tax under this Act on all sale of goods (other than electrical energy) effected by him in the course of inter-state trade. Goods here include all materials/articles/ commodities and other kinds of moveable property.

4) since you are selling goods to customers across india CST would be levied

Ajay Sethi
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