RS India launches X-dock facility with zero per cent tax transaction

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By Richa Chakravarty

RS India is the first distributor to launch zero per cent sales tax transactions in the industrial retail distribution business in India

RS Components and Controls, one of the leading high-service distributors of electronics and maintenance products, and known for its customer centric approach, recently introduced the cross-docking (X-docking) facility, with the sole objective to improve its customer service further. Through this facility, RS customers, irrespective of online or offline transactions, can avail zero per cent tax benefits and continue the transaction.

What is X-docking facility?

In general practice, X-docking facility is used in logistics where it streamlines the supply chain from the point of origin to the point of sale. RS X-dock facility directly connects its customers to the centralised warehouse in UK. Orders will be placed in a similar way as with RS India, in Indian rupees. Consequently, goods will be identified, picked and packed in the name of the customer before leaving from the UK warehouse, hence leading to prompt delivery and a reduction in operating, handling and storage costs. “Since the X-dock material comes as identified and separately packed for the customer, there is no need for segregation, packing or re-packing in India, which reduces the time taken to dispatch material to customers,” says Manu Nanda, head, business development, RS Components and Controls (I) Ltd. RS has also fully automated its backend support system for the X-dock facility.

Benefits of X-dock

X-dock offers huge benefits to consumers as there is no sales tax attached to any purchase and, moreover, the consumer does not have to face any hassle in issuing concessional forms (C-forms). In any business transaction, while booking an order, the sales team spends a lot of time in collecting C-forms from the customers. The main obstacle faced by sellers here is the delay in fetching these forms or sometimes even the non-submission of the form, making the customer a defaulter. But the X-docking facility eliminates the need to issue any such form. Moreover, the consumer enjoys the benefit of a delivery that is one day earlier. The customer can also choose to be billed in Indian rupees, the dollar or the pound.

Buying components and products from RS India can help customers save about 5 to 13.5 per cent (both levied as VAT or sales tax respectively), or just 2 per cent (in case of carrying business transaction through C forms), on the cost of the components. In both cases, zero per cent sales tax will be applied. Moreover, customers are not charged extra for availing the X-dock facility.

While RS customers have the benefit of zero per cent sales tax, RS India has obtained an advance ruling covered under section 5(2) of Uttar Pradesh VAT Act to carry on with such tax billing. RS India manages the transaction as ‘sales in the course of import’. This type of a transaction is covered under section 5(2) of Central Sales Tax Act and does not attract any sales tax. Hence, there is no need for the customer to inform the tax authorities before entering into X-dock transactions with RS.

Some limitations

Despite all these benefits, there are certain limitations to this facility. The tax benefit will not be applicable in case of India stocked items, that is, products which are locally sourced from key suppliers in India. Also, hazardous items like lithium batteries, aerosols and certain chemicals are not eligible for this tax benefit.

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