Overview of Commercial Tax in Punjab:
The Punjab Commercial Tax, also referred to as Value Added Tax came into force in 2005. Implemented throughout the state, right from its inception, this tax was introduced to provide for the collection of value added and turnover tax on sales or purchases of goods.
Punjab Commercial Tax / VAT Registration:
Every individual, excluding casual traders and the ones dealing with tax free goods, whose gross turnover has exceeded the taxable quantum is supposed to pay VAT, as declared by the Tax Department of Punjab. Individuals and dealers, who wish to register for VAT can do so by visiting the Punjab Taxation Department. However, online registration. through the official portal, of VAT is also accepted. With the help of the official website of the Tax Department of Punjab, dealers can raise a request for registration under VAT Act. On the portal, the dealer will have to enter the Application details and attach/upload the scanned copies of documents/photos required, along with the application form.
Here is a list of documents that is mandatory for registration under Punjab VAT:
- VAT Eligibility Proof (bill of goods purchased outside the state).
- Identity Proof (Driving Licence, Ration Card, or any other government authorised document) of the proprietor, partner or managing director.
- Business premises proof, such as proof of ownership or rent receipt/deed.
- Incorporation document, to identify if the concern is a limited company or a partnership firm. In case of a limited company, the trader will have to produce a copy of Memorandum of association and copy of Resolution. For a firm, the trader will have to show the partnership deed.
- PAN of the proprietorship concern or partnership firm, whichever is applicable.
- Two photographs of the proprietor/partners/managing director in case of proprietorship concern/partnership firm/company respectively.
- Bank account number, along with the bank’s name, of the concerned person
- Two sureties who have TIN and own a property or bank guarantee around Rs. 100000 (50000 for tax under PVAT Act and Rs 50000 for tax under CST Act)
- List of goods to be traded, manufactured, or purchased to be used in manufacture.
All these documents should be photocopied and have a true copy attestation by the director/proprietor/partner as applicable.
Once these details are submitted the system will generate an acknowledgement slip with a unique number for future reference. The dealer can then check the status of his application using the generated unique code through the system. Post approval of the request, the dealer will be sent the copy of the VAT Certificate through post.
Punjab Commercial Tax Rates:
The VAT levied on goods and products in Punjab may differ from commodity to commodity. The tax is applicable according to different schedules and the provisions under Schedule A, Schedule B, Schedule 2(B), Schedule 2(C), Schedule 2(D), Schedule 2(E), Schedule 3 and Schedule 3(A).
Under this schedule there are approximately 57 goods and products that are generally exempted from VAT or do not have VAT levied on them. The products that are included in this schedule are manually operated agricultural implements, animal-driven agricultural implements, tractor-driven agricultural implements, power implements, paper and newsprint, life saving drugs, renewable energy materials, kerosene, fresh vegetables and fruits, textiles etc. A few other commodities that have no VAT levied on them are listed as under:
- Goods exported to other countries.
- Goods exported by Export Oriented Units (EOU)
- Commodities and goods sold from Domestic Tariff Area (DTA) to Special Economic Zones (SEZ) and Export Oriented Units(EOU)
- Commodities sold between SEZ and EOU.
There are more than 200 products on which a VAT rate of 4% is levied. Goods that fall under this category are non-manually operated agricultural implements, bulk drugs, sports goods, kitchen ware, hospital equipment, communications equipment, etc. Intangible goods such as rep license, patents, and copyrights also fall under Schedule B of the Punjab Commercial Tax Act.
Commodities such as gold, silver, and platinum ornaments, noble metals and ornaments, bullions, and precious stones are charged a VAT rate of 1%.
In this schedule a VAT rate of 13.5% applies to over 159 goods. These are arms and ammunition, aeroplanes and other aircrafts, cosmetics, advertising hoardings, tobacco products, and electronic goods, among the many other commodities.
Punjab VAT/Commercial Tax Forms:
The Punjab Value Added Tax Act of 2005 has around 57 forms that are required for registration and exemption of VAT. While each form fulfills a particular requirement some of the important ones are:
- Form 1 - Application for new registration
- Form 2 - Tax invoice
- Form 3 - Registration Certificate
- Form 17 - Return Form
For VAT exemption, the Tax Department rules apply. Exemptions are based on the commodities, as segregated by the Punjab Tax Department.
Punjab Commercial Tax Payment and Return e-Filing:
VAT payments and e-filing can be made through the official website of Punjab Tax Department. The same portal can be used for VAT returns.
Here are the instructions for filing e-returns:
- Log in with your dealer credentials on the official website
- Click on the ‘Returns Entry’ section to enter specific returns details
- After entering the required details, proceed to e-payments
In order to make payments you will have to follow these steps:
- Log-in to the official website of the Punjab Taxation Department
- Select the ‘Make e-payment’ from the online e-services section
- Click the ‘VAT - Value Added Tax’ option for payment of tax
- Enter the respective TIN number and select the payment type
- Enter the tax amount, interest, penalty (if any, and your mobile number
- Click on ‘submit’ to generate the e-payment reference number
Punjab Commercial Tax FAQs:
- How is a dealer in Punjab charged VAT?
Under the Punjab Value Added Tax Act 2005, a dealer is levied tax on the taxable turnover of sales according to the rates specified in Schedule 2 of the VAT Act, as per government regulations.
- What is the duration for VAT registration in Punjab?
In Punjab, a dealer has two months to register for VAT, from the date which he is first liable to pay Commercial Tax.
- Who will pay the tax in event of the dealer’s untimely death?
As per the Punjab Tax Department rules and regulations, in case the dealer dies in between paying VAT, his legal representative will be liable to pay the commercial tax.
- What is Input Tax?
The tax charged under the Punjab VAT Act by a registered dealer on the purchase of commodities from another registered dealer is defined as Input Tax.