VAT Registration

Value added tax (VAT), is a sales tax levied on the sale of services and goods. VAT is an indirect tax, which is collected from someone other than the person who actually bears the cost of the tax. Personal end-consumers of s services and products cannot recover VAT on purchases, but businesses are able to recover VAT where they use the supplies that they receive that bear VAT to make further supplies that also bear VAT. VAT registration is essential depending on your sales turn over and other business parameters. Along with VAT registration, we look after registration with excise and customs also. VAT registration and VAT returns submissions are also carried out through our panel of experienced tax experts.

MANDATORY REGISTRATION


Who must apply for registration?

Every dealer is required to apply for registration, if: -

The dealer's turnover in the year preceding the commencement of this Act exceeded the taxable quantum; or
the dealer's turnover in the current year exceeds the taxable quantum; or
Regardless of the taxable quantum, the following dealers must apply for registration, if :-
You make any interstate sale; or
You make interstate purchases for resale in Delhi.

HOW TO CALCULATE MY TAXABLE TURNOVER?
Taxable turnover is the aggregate total of sale prices of all taxable goods including goods taxable at zero rate. Sale price of goods and transactions exempted and VAT charged on taxable sales do not form part of Taxable Turnover. "Taxable quantum" of a dealer is five lakh rupees, or such other amount as may be specified by the Government by notification in the official Gazette.

a dealer who imports for sale any goods into Delhi, the taxable quantum shall be "Nil" or such other amount as may be specified by the Government by notification in the official Gazette.
The taxable quantum of a dealer shall not include turnover from:-
Sales of capital assets;
sales made in the course of winding up the dealer's activities; and
sales made as part of the permanent diminution of the dealer's activities.
In case of dealers involved in execution of works contracts, the taxable quantum shall be calculated with reference to the total contract amount received.  you deal entirely in exempt goods, you are not required to apply for registration under DVAT.  In which capacity you register yourself.

It is the person, NOT the enterprise, who is registered for VAT. The person is only registered once for all enterprises/branches/divisions carried on unless permission is granted to register them separately.

The term dealer includes :-

Sole proprietor (individual)
Partnership
Hindu undivided family
Club, Society or Association
Incorporated/unincorporated body of persons
Corporation / company
Association not for gain
Welfare organization / trust
Local authority and certain public authorities

WHEN CAN I REGISTER FOR VAT ON A VOLUNTARY BASIS?

In addition to the regular registration, the Act allows a person to take voluntary registration for VAT. You can register yourself under VAT voluntarily i.e. even if you are not liable to register under VAT Laws. You will have to charge VAT on all your taxable sales and keep all the records, which all taxpayers must keep. You will be allowed to reclaim input VAT on your purchases and expenses. You will need to think carefully about the advantages and disadvantages of being registered.

You may apply for voluntary registration even though the value of taxable supplies in the course or furtherance of your enterprise is below the limit of threshold per annum. It may be in your interest to register if you make supplies of goods or services mainly to other vendors. Before applying for voluntary registration you should, however, consider the obligations/implications of registration. You may, however,
a) Claim a credit for input tax
b) Issue tax invoices to customers who are vendors.
Registration is not available to persons who make only exempt supplies.

WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR VOLUNTARY VAT REGISTRATION?

In considering whether you should register voluntarily for VAT, you should ask yourself these questions:
Do I make taxable sales to other VAT dealers?If you are not registered for VAT you cannot issue tax invoices on which your customer (VAT dealer) can claim credit for the tax. Your customer will therefore have to charge a higher price for his sales if he cannot claim a credit for the VAT. In this case he might choose to trade with another VAT dealer and you would lose business.

Do I trade, primarily with non-VAT dealers/consumers?In this case, it is likely to be in your interest not to register for VAT.

What are the obligations of VAT registration?
Once registered, you will have to account for output tax that is attributable to your taxable sales. You will also have to submit VAT returns monthly to the Commercial Taxes Department and keep proper books of accounts.

If you decide to register voluntarily, the Law requires that you must remain registered for VAT for a period of 24 months regardless of your taxable turnover.

Is my input tax credit likely to exceed the tax on the sales I make?
In this case you will benefit from VAT registration.

When do I start to charge VAT?

You should start keeping VAT records and charging VAT to your customers from the date notified to you by the Commercial Taxes Department. This will be the date shown as the effective date of your registration on your Certificate of Registration. You will have to account for VAT from that date.

What are my obligations as a VAT registered taxpayer?Display your certificate of registration.
Charge VAT on all taxable transactions from the date of registration.

Issue tax invoices.
Keep accurate and up to date books and records and make it available for inspection by VAT auditors.
Submit a declaration to the local VAT office each month.Pay the tax due each month.

VAT REGISTRATION PROCEDURE

A dealer who is required to apply for registration shall make an application for registration to the Commissioner in Form DVAT-04 within a period of thirty days from the date of his becoming liable to pay tax under the Act and shall pay the filing fee as prescribed in Annexure 1 to the VAT rules.

DOCUMENTS REQUIRED FOR VAT REGISTRATION

The application for registration is to be accompanied by the following:

1) Deposit receipt of prescribed amount towards fees for registration. Such deposit receipt is to be obtained from the appropriate treasury after payment of the fee amount.
2) Copy of the constitution document e.g. Partnership deed for a partnership firm, Memorandum and Articles of Association for a company.
3) Board Resolution authorizing the signatory to sign the application in case of company.
4) Proof of identification of the authorized signatory e.g. voter identity card, passport, driving license.
5) Proof of principal place of business e.g. rent receipt, lease agreement, electricity bill.

Who is required to sign the application for registration?

The Application for registration is required to be verified and signed by an authorized signatory. An authorized signatory for different categories of persons is:

Proprietor, in case of proprietorship concern
Managing partner, in case of partnership firm and where there is no managing partner, by any of the partners.
Managing Director or authorized signatory, in case of a company.
Karta, in case of Hindu Undivided Family and authorized signatory.
For detail information on VAT registration in various States and required form please visit:             WWW.ALLINDIANTAXES.COM/VAT.PHP