VAT Return Filling

VAT is value added tax, a tax levied on the sale of goods in India. Since VAT is a state regulated tax, all the provisions regarding this tax is made in accordance with state. Each State in India has unique VAT Regulation and different tax rates are applicable for different types of products. Therefore the VAT Tax Rate and Exemptions will be unique to each State and type of goods sold.

Since service tax is an indirect tax, it is paid by the final consumer. A person, providing services, has to levy service tax on the amount of service charge. Also, small scale service providers who provide less than Rs.10 lakhs of taxable service a year is exempt from service tax.

VAT is ultimately borne by the end consumer. At each stage, the person purchasing the goods must pay VAT on its purchase price and collects VAT from his customer on sale price. Thus a dealer must pay tax on the value addition by him.

The VAT rate will depend on the type of goods being sold and the State in which the goods is being sold. Thus it will be appropriate to refer the state specific provisions regarding application of VAT Rate on different commodities.

VAT Registration is a State level registration for paying VAT, which is mandatory for manufactures and traders having an annual turnover of more than Rs.20 lakhs in Delhi (previously Rs.10 lakhs). VAT Registration gives the manufacturer or trader a unique 11 digit number that would be required for subsequent VAT Compliance, VAT Filing and other matters incidental to VAT or Sales Tax or Central Sales Tax.

TIN stands for Tax-Payer Identification Number, which is provided by State Govt. to dealer asa symbol of registration. It is unique in all over India. All the proceedings related to sales tax either VAT or CST is identified with TIN.

Any dealer, who wants to transact at inter-state level, must obtain CST Registration for complying CST Act. CST is chargeable in the state from where the movement of goods is being started. For Registration in CST, some legal formalities is to be fulfilled in addition to VAT Registration. All the proceedings are to be done with TIN.

VAT Registration is mandatory for manufactures and traders having an annual turnover of more than Rs.20 lakhs in Delhi (previously Rs.10 lakhs).

To obtain VAT Registration, following information is required-

• A copy of PAN Card,
• Proof of address of business,
• Constitution of the business [Partnership deed, Incorporation Certificate, etc.,] and
• Proof of identity of the promoters is required.
• In addition, security deposit or surety or reference maybe required to obtain VAT
• Registration based on the State in which the business operates.

(Please contact a Rajput Jain & Associates’ Representative to know the requirements for your State.)

VAT Registration is issued by the State Government. Therefore, based on the State, the processing time for obtaining VAT Registration will differ. In general, VAT Registration can be obtained in 15 - 20 working days.

Who shall be liable to obtain TIN (Tax Identification Number)

Every person,

• Having turnover more than Rs 20, 00,000/- during the year or previous year within Delhi
• Want to Sale or Purchase Goods to/from outside Delhi i.e. in the other state but within India.
• Casual Dealer (you make sales on an occasional basis e.g., during an exhibition or at the Trade Fair, you would need to apply for registration as a Casual Dealer.).
• Sales under Hire-purchase agreement or lease of goods to someone else
• Works contracts..
• Importing goods in the course of business from outside the territory of India.
• Every commission agent, broker, auctioneer or any other mercantile agent by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of his non-resident principal..
• Having Turnover below Rs 20 Lakh can also apply for registration and obtain TIN Number
• Banquet Hall, Club, Restaurant’s.
• Time limit for obtaining TIN: Within 30 day from date of liability to get registration arise i.e. Turnover exceeded Rs 20 Lakhs or wants to sale outside Delhi etc.

VAT payments can be made at specified branches of designated banks. The list of designated banks can be obtained from the Central Excise or Sales Tax office.

Delhi VAT Tax Rates

In Delhi VAT Tax Rates are levied under seven categories. The Delhi VAT Tax Rate schedule determines which goods full under each of the seven category and the VAT tax rate associated with that category.

• Schedule I – VAT Exempted – (Example: Books, Charcoal, Fresh Vegetables, Meat, etc.,)
• Schedule II – 1% VAT Tax – (Example: Bullion, Gold, Silver, Precious Metals, Precious Stones, etc.,)
• Schedule III – 5% VAT Tax – (Example: Communication equipment, bricks, utensils, coffee seeds, computers, etc.,)
• Schedule IV – 20% VAT Tax – (Example: Liquor, Lottery Tickets, Aerated Drinks, etc.,)
• General Category – 12.5% VAT Rate

VAT payments must be deposited by Proprietary Firms, LLPs and Partnership Firms quarterly. Other entities are required to make VAT payment monthly.

VAT returns are due on the 20th of every month. The previous months VAT information must be filed on the 20th of every month.

VAT Registration Highlights

Value Added Tax

Value Added Tax (VAT) is a tax levied on the sales of goods in India. Manufactures and traders should obtain VAT Registration, if they have annual sales of more than Rs. 5 lakhs (Rs. 10 lakhs in some states).

End Consumer bears VAT

All purchasers of goods in India must pay VAT. However, at each stage, the person purchasing the goods is allowed to set-off the VAT paid against the VAT liability on subsequent sale. Thereby making the end consumer pay the VAT.

VAT / TIN / CST are the Same

VAT / TIN / CST utilize the same unique 11 digit number. Therefore, VAT / TIN / CST are the same and obtaining VAT Registration from the State authorities will suffice as the TIN or CST Registration also.

State Level Tax

VAT is determined and collected by the State Governments. Therefore, each State has a different VAT Regulation based on the type of goods sold. Therefore, it is best for businesses to be aware of the State's VAT Regulation applicable to them.

VAT Due Dates

VAT Payments must be deposited in designated banks quarterly in case of Proprietary Firms, LLPs or Partnership Firms and monthly in the case of other type of business entities like Companies. VAT Returns must be filed monthly on the 20th.

NO VAT on Exports

For goods exported from India, VAT is not applicable. Therefore, exporters of goods are not required to pay VAT. However, it is advisable for exporters to obtain VAT registration.

ADVANTAGE OF VAT

• A perfect system of VAT is a perfect chain where tax evasion is difficult.
• VAT facilitates precise identification and rebate of the tax on purchases and thus ensures that there is no cascading effect of tax
• Under a VAT system, the buyer knows, out of the total consideration paid for purchase of material, what is tax component. Thus, the system ensures transparency also.
• VAT does not have any inflationary impact as it merely replaces the existing equal sales tax. It may also be pointed out that with the introduction of VAT; the tax impact on raw material is to be totally eliminated

There are some information in the form of Books of Accounts which must be kept under Rule 42 of DVAT Rules, 2005 viz. Sale/Purchase Invoices, DVAT 30 & 31, documents in support of movement of goods i.e. GR/RR, returns filed, copy of balance sheet, cash book, stock register etc. Though books of accounts for last four years should be kept at the business premises, however, during survey, the dealer should at least produce books of accounts for the last financial year and the current financial year.

Some of the guiding principles of sealing are detailed below:

• A perfect system of VAT is a perfect chain where tax evasion is difficult.
• VAT facilitates precise identification and rebate of the tax on purchases and thus ensures that there is no cascading effect of tax
• Under a VAT system, the buyer knows, out of the total consideration paid for purchase of material, what is tax component. Thus, the system ensures transparency also.
• VAT does not have any inflationary impact as it merely replaces the existing equal sales tax. It may also be pointed out that with the introduction of VAT; the tax impact on raw material is to be totally eliminated

VAT payments can be made at specified branches of designated banks. The list of designated banks can be obtained from the Central Excise or Sales Tax office.

VAT payments must be deposited by Proprietary Firms, LLPs and Partnership Firms quarterly. Other entities are required to make VAT payment monthly.

VAT returns are due on the 20th of every month. The previous months VAT information must be filed on the 20th of every month.

What is the procedure for registration of VAT / CST? TIN

STEPS BY STEP PROCEDURE FOR REGISTRATION UNDER THE DELHI VAT ACT-

• First of all, the dealer has to go to the official website of Delhi VAT by using following domain, i.e.www.dvat.gov.in
• Then click on the link of “New Registration” available on the left side of the page.
• After that, the dealer have to submit some basic details for PAN verification from NSDL, such as, Name of the Firm/Company, Constitution, PAN, Aadhaar No. and Contact details online.
• On successful PAN verification, the dealer will be provided Username and password through e-mail for further process.
• The dealer would login and fills up registration forms, i.e., for Local “DVAT-04” & for Central “Form-A” in which dealer have to submit details as mentioned below: -
  • Address of principal place of business;
  • Any additional place of business;
  • Bank details;
  • Particulars of persons involved in the Firm/Company;
  • List of Goods to be dealt in along with goods required for packing; etc.
• And upload supporting documents such as ownership proof/rent agreement/NOC of landlord/electricity bill/telephone bill, address proof, identification proof, etc.
• The size of respective documents should be less than 100 KB each in the format of pdf/jpeg.
• If the size of documents gets greater than 100 KB, then the dealer can use various software’s, such as, Microsoft Office picture manager, Photoshop, CorelDraw, etc. to reduce the size to 100 KB or less.
• Then go to the link of submission to submit the registration application with VAT department.
• After submitting, the dealer will receive one e-mail consisting of temporary TIN and password which can be used for further transactions.
• The Court fee of Rs. 1,025/- (w.e.f. 17.6.2014) for new registration will be submitted online.
• After the whole procedure is approved by the VATI, the dealer can take out the print of online generated Registration Certificate and need not to go to Trade & Taxes Department.
• Documents to be given to Vat Inspector at the time of his visit.
  • Copy of DVAT-04 Application,
  • Copy of Challan,
  • Photocopy of PAN card of Proprietor / Company / Firm / LLP (Originals to be shown),
  • Photocopy of PAN card of all Director's / Partner's (Applicable in case of Companies / LLP) (Originals to be shown).
  • Photocopy of Address Proof (Voter id or Passport or Driving License or Aadhar of Proprietor / Director's / Partner's) (Originals to be shown).
  • Cancelled Cheque.
  • Photocopy of Electricity Bill along with Rent Agreement / NOC (Originals to be shown).
  • Photographs of Proprietor / Director's / Partner's.