5 steps for Indian sellers to stay tax compliant during the big, fat, and great holiday sales

Summary:

  • Black Friday, Cyber Monday, Christmas, and New Year are some of the most important holidays for businesses.
  • While there are significant discounts and sales, many buyers rush to buy during this time.
  • Sellers often end up taking too many things on their plates. While focusing on providing an excellent product and service, the taxes and compliance part is often less cared for until it comes back to the business in a costlier and penalty-full form.
  • Taxes are complex, and rules and laws guiding them keep changing across the world. Keeping track of them becomes challenging, especially during rush hours for a business.
  •  The best way of overcoming tax problems is by including automation in your tax compliance strategy.

Black Friday and Cyber Monday are almost there now, and Christmas and New year are ringing bells. It is a whole month of holidays in the West. While many Indian businesses didn’t look at them as opportunities earlier, the last few years have seen remarkable growth in the number of Indian businesses offering their products and services at discounted prices on these foreign holidays, more so after the pandemic.

The pandemic brought the world together, thought wise and literally. E-commerce flourished, and the whole world became one big market. So, keeping your virtual shops shut saying that your region does not celebrate this holiday is primitive. Since the last few years, marketplaces like Amazon and Flipkart have recorded a large number of Indian sellers offering their products at discounted prices on the Black Friday sales, and there is no denying that these businesses pocketed surplus. Consumer behaviour has changed. More and more buyers are looking for unique products from foreign markets for themselves and their loved ones. Not preparing for it is only refusing an opportunity lying on the table.

While your business fares through the international markets, having a robust and flexible and scalable tax compliance strategy becomes essential, especially during rush hours. Selling in global markets is full of opportunities, but many sellers face problems related to tax compliance. These problems mainly arise due to a lack of knowledge about foreign tax laws, a robust tax compliance strategy not being in place, and misbeliefs and misunderstandings about the markets. A good tax compliance strategy will help you with the following-

  1. Elevating buyer experience
  2. Removing the ambiguity in price estimation
  3. Adapting to changes quickly
  4. Efficient, seamless selling experience
  5. Reducing costs
  6. Mitigating compliance risks

Here are the things that you need to include in your tax compliance checklist.

1) Registering your business-
If you have just started selling across borders, you need to ensure that you have registered for taxes in that particular jurisdiction. This will give you the required licenses and authority to trade in that specific region and pay taxes whenever needed.

2)  Acquire knowledge regarding where and when to file returns- 
Awareness regarding the required frequency of filing returns and other requirements of the jurisdiction will help your business plan for them properly.

3) Calculate the amount of tax liability precisely-
Knowledge regarding the requirements of that particular jurisdiction will help you know the tariff rates and help you calculate the tax liabilities precisely. Accurate calculations will help you estimate and quote the prices to the buyer correctly, and you will be able to avoid troubles at customs.

4)  Keep track of exemptions and permissible items and manage them-
Knowing what is exempt and permissible is just as important as knowing tariff rates and deadlines for filing returns.

5) Be ready with the documentation for audit- 

When it comes to selling into foreign lands, it is always better to keep all the documentation ready at all times to procure and submit them whenever required or called upon.

Tax and tax compliance becomes an arduous task for many, especially during sales and discounts. Hiring SME’s is a significant expenditure, and many businesses are often looking for cheaper and more accurate alternatives. But with a bit of knowledge and a little help, you can overcome these challenges and take your business to new heights. Avalara uses the power of technology to solve these problems for customers. With the help of artificial intelligence, we help tackle these daily tax challenges with our software solution. We at Avalara build software solutions to help you automate taxes so that you can focus on doing what you love. Let us help you with your day-to-day indirect tax needs. Get in touch with us today.

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