No VAT can be charged on discounted goods.

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Hmmm..., I have recently saw this trend of charging extra VAT on various shops.

See, I roughly calculate in my head the price I would have to pay after discount - say 30% discount on 1500rs, which would be 7 x 15 = 105 hence 1050 rs. But when the final bill didn't match, then only I saw the little notorious star (*) - saying VAT extra. :D

Good news indeed.
 
Good news indeed. Now maybe the companies which offer BOGO will not charge the same on the free one - some do, I will need to get some bills and check it out.

No VAT on items sold at discount: Consumers' body
TNN | Feb 3, 2017, 06.10AM IST


NEW DELHI: The National Consumer Disputes Redressal Commission has held that shops selling goods at 40% discount cannot charge VAT or any other duty on the discounted price. It said that the rebate was on the MRP, which includes all taxes and cess as per Section 2(d) of Consumer Goods Act.

The NCDRC order came last month after state forums had rejected the plea of Woodland franchises in Chandigarh and Delhi that had refused to refund VAT charged to customers on jackets sold at 'flat 40% discount'. The amount in dispute was Rs 119.85, which was the VAT charged on a jacket bought at 40% discount on an MRP of Rs 3,995.

Justice D K Jain, NCDRC president, held that "the advertisement in the above form is nothing but an allurement to gullible consumers to buy the advertised merchandise at a cheaper bargain price, which itself was not intended to be the real bargaining price and, therefore, tantamount to unfair trade practice".

"The defence of the petitioners that they had charged VAT as per law is of no avail as the issue, viz misleading advertisement resulting in unfair trade practice, is concerned," the order said. The bench upheld verdicts of district and state forums that any discount falling short of "flat 40%" on the MRP would amount to unfair trade practice. The district forum had directed the shop owners to refund the extra amount to complainants, besides paying compensation, ranging between Rs 2,000 and Rs 5,000, and litigation cost, between Rs 1,000 and Rs 2,500.
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I think the "No VAT" is misleading wording by TOI-let paper. It's more of discount percent being advertised incorrectly IMO. Of course VAT will be compulsory, just that the percentage discount shown should be clearer whether it is on MRP or pre-MRP price I guess.
 
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Pantaloons and few other brands charge VAT on the pre discount price.
E.g if the mrp is 5000 and its on 40% discount. The VAT is charged on Rs.5000 and not Rs3000. I sometimes find this weird but cant help it.
Anways the article does not clearly explain what is expected as per rules. Like in above eg. as per govt rules
1)No VAT should be charged at all?
2) VAT should be charged on original price of Rs5000?
3) VAT should be charged on discounted price of Rs3000?

which is it? Thats not covered in the article clearly.

This one has more info.
http://www.livelaw.in/shops-cant-charge-extra-vat-items-sold-discount-ncdrc-read-order/
 
From my understanding of the wording "cannot charge VAT or any other duty on the discounted price" means it's option 3.

"Discounted price" means the Rs 2000 less amount, VAT cannot be charged on that. Only on the final price of Rs. 3000.

If "MRP" is 5000 then VAT is already included, so "flat 40% discount" means they should charge 3k total, including VAT.

BUT if you read item number 6 in that livelaw.in link where the order text is included it explains a scenario where it can come even less (I think).

@onlyravi - are you saying pantaloons charges VAT on top of the MRP of 5000 ??? that seems shady to me. Or were you just giving an example? Because apparently "MRP" is inclusive of VAT.[DOUBLEPOST=1487166167][/DOUBLEPOST]
onlyravi said:
Pantaloons and few other brands charge VAT on the pre discount price.
Click to expand...

Yeah looks like this order is specifically for this scenario... places like these will have to clean up their act.
 
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vishalrao said:
From my understanding of the wording "cannot charge VAT or any other duty on the discounted price" means it's option 3.
"Discounted price" means the Rs 2000 less amount, VAT cannot be charged on that. Only on the final price of Rs. 3000.
If "MRP" is 5000 then VAT is already included, so "flat 40% discount" means they should charge 3k total, including VAT.
BUT if you read item number 6 in that livelaw.in link where the order text is included it explains a scenario where it can come even less (I think).
@onlyravi - are you saying pantaloons charges VAT on top of the MRP of 5000 ??? that seems shady to me. Or were you just giving an example? Because apparently "MRP" is inclusive of VAT.[DOUBLEPOST=1487166167][/DOUBLEPOST]
Yeah looks like this order is specifically for this scenario... places like these will have to clean up their act.
Click to expand...
Yes they charge VAT on pre discount price. Also there is a caveat where if the MRP or the list price has mentioned VAT Extra then the merchant can legally charge VAT on and above the listed price(Altough the discounted price has to be considered and also I doubt in such a case (where they charge VAT extra) Can they list the price as MRP? )
Wish I had known about this about a week earlier. made some big purchases recently from Pantaloons
 
onlyravi said:
Pantaloons and few other brands charge VAT on the pre discount price.
E.g if the mrp is 5000 and its on 40% discount. The VAT is charged on Rs.5000 and not Rs3000. I sometimes find this weird but cant help it.
Anways the article does not clearly explain what is expected as per rules. Like in above eg. as per govt rules
1)No VAT should be charged at all?
2) VAT should be charged on original price of Rs5000?
3) VAT should be charged on discounted price of Rs3000?

which is it? Thats not covered in the article clearly.

This one has more info.
http://www.livelaw.in/shops-cant-charge-extra-vat-items-sold-discount-ncdrc-read-order/
Click to expand...
I have never understood the bills being generated by any of the future group companies. The wording is so effed up that it will make you go cross eyed. They always quote the MRP and VAT where the quoted MRP is inclusive of the VAT making it impossible to read.

My reading of this is, in the confusing Future Group way is, when they prepare the bill they should have two line items - a. The MRP with discounted price (3k ) and b. the VAT charged on the discounted MRP (450). They cannot go back and charge on 5k (750) to try and bring down the discount by 300 (effective discount of 34%).

As for the issue of "VAT extra" what I find is many people are ignorant about this. They don't complain to Pantaloons or their ilk so they never change. It takes some cases like these to compel them to work correctly.
Personally I don't shop in Pantaloon's because their sales channel sucks big time. Last time they ran an offer on 1k coupons on 5k purchase. So we bought some stuff and got the coupon. On returning home, we dint like some colors and went to return the clothes 3-4 days later. And as it happens we bought some stuff extra too. We tried to use the coupon only to be told it can only be used 2 weeks later. On asking where was this mentioned they couldn't answer but refused to apply the coupon.
 
sharktale1212 said:
I have never understood the bills being generated by any of the future group companies. The wording is so effed up that it will make you go cross eyed. They always quote the MRP and VAT where the quoted MRP is inclusive of the VAT making it impossible to read.

My reading of this is, in the confusing Future Group way is, when they prepare the bill they should have two line items - a. The MRP with discounted price (3k ) and b. the VAT charged on the discounted MRP (450). They cannot go back and charge on 5k (750) to try and bring down the discount by 300 (effective discount of 34%).

As for the issue of "VAT extra" what I find is many people are ignorant about this. They don't complain to Pantaloons or their ilk so they never change. It takes some cases like these to compel them to work correctly.
Personally I don't shop in Pantaloon's because their sales channel sucks big time. Last time they ran an offer on 1k coupons on 5k purchase. So we bought some stuff and got the coupon. On returning home, we dint like some colors and went to return the clothes 3-4 days later. And as it happens we bought some stuff extra too. We tried to use the coupon only to be told it can only be used 2 weeks later. On asking where was this mentioned they couldn't answer but refused to apply the coupon.
Click to expand...

Not that it matters to the context of this thread but
Now Pantaloons is taken over by the Aditya Birla group. The service has improved but all the billing and other confusion remains.
Future Group is losing customer base and business everywhere no surprise why....
 
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