Wednesday, July 2, 2014

Illegal charging of VAT on discounted prices by brands/retailors

An article titled "Is "Ritu Wears" adapting to Ethical Business Practices? probably "No". appeared in this blog on 09/02/2014 and another article titled Why VAT being charged by Aditya Birla Nuvo on discounted MRP when MRP is inclusive of all taxes?. on 10/02/2014. This article pertains to the illegal charging of VAT by the many traders including Ritu Wears including Park Avenue, Aditya Birla etc. in a case where the traders are giving discount as %age of MRP. Since the MRP is always inclusive of VAT and no additional amount is chargeable, the discounted prices are also MRP and are inclusive of VAT. Any additional charging of VAT is not chargeable and it is felt that one of the VAT is being pocketed by the traders. In that scenario there is a possibility of tax evasion.

The issue was also brought to the notice of the Department of Consumer Affairs, Govt. of India. Department of Consumer Affairs, Govt. of India have requested State Controllers of Legal Metrology to take necessary action for the violations of Legal Metrology (Packaged Commodities) Rules 2011. A scanned copy of their letter No. WM-10(28)/2014 dtd. 23/06/2014 is posted here for wider awareness of the consumers. 

The consumers who are charged VAT extra on the discounted prices are requested to report the matter to their State Legal Metrology officials with a copy to the Trade and Taxes Department of your State.

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