I have a query regarding whether my company should charge Excise & VAT on sales.
Our company has been in partnership(only verbal) with another company based in Hong Kong who will place order for our products (Garment accessories), but expect us to deliver goods in India to one of the garment exporter.
The customer bills the garment exporter directly, and we bill the customer for our sale.
Since the goods are not leaving the country, I am told that I need add Excise and Vat to the price. However, since I am billing to a foreign company who is not registered in India, they cannot claim back the tax or pass it on, and this becomes a cost to them(approx 17.36%). This makes us less competitive and the customer has decided to not sourcing from us, and is rather directly shipping from China/HK.
Could I know whether it is possible to avoid this cost for the customer?
Our products are going to be attached on the garments and eventually exported by the exporter. Does this help in claiming that our product is of export?