I remember when Canvas 4 was launched by Micromax, it was being sold at 4-5000/- above the selling price set by Micromax. And this was being done by retailers citing high demand and low supply. Was all of that illegal?
Yup it was. But I am pretty sure that the amount on the bill never exceeded the MRP.
And this is how and why forum sales can be termed as personal. Does anyone see a seller providing a bill from their side. I don't think so and hence they can't be bound by the laws governing MRP. How they show the profit and pay taxes on it is the seller's and the IT dept concern.
I have been importing mobile phones and selling them for profit for the past 3 years or so. Earlier, as I wasn't making much, so my CA guy did some jugaads to fill my IT return.
Now since I have taken my business to the next level, I am going to start paying service tax. I didn't know about the intricacies and was just doing it for some pocket money at first while preparing for higher studies.
This is no excuse and I most definitely should have paid taxes before, but there is so much ambiguity regarding such sales, not only here but all around the world. I know this because I had a guy in US who was just like me and he told me that if our transactions crossed a certain no per month, he will have to setup a company and start paying taxes. Under that figure, it was ok.
Coming to my business model, there is a lot of ambiguity. What is to stop me from saying that I bought the phones that I import for personal usd and then after using them for a couple of hours, I decided to sell them off. That way I won't have to pay any service tax. But I actually want to pay taxes and that's why I am not taking that path. Also I am pretty sure, looking at my quantity of sales from next month onwards it will be difficult to convince anyone that I was buying those phones for myself.
But I know of many people who import phones in hundreds and I don't think any of them pay service tax from their profits.
But like I said above, there is ambiguity regarding such sales in every country and every country's IT dept will only get concerned if your revenues are high and trackable.
Most of my sales can't be tracked because I get payment in cash, but since I buy all the phones through my credit card, all of my purchases, hence all of my sales get tracked.
The sellers I was talking about earlier, send payment via Havala and get paid in cash most of the time and they then funnel this cash into some other business. I know this guy in Delhi, who currently has more than 50 G2 available but he never sells online because his sales will get tracked and that means his imports will get tracked where he has a setting. Sellers like me don't have that issue because our purchases as well imports are already tracked.