Value Added Tax or VAT is nothing but a levy that was established by the Indian Government (the Central Government) in the early 2000s. The VAT and service tax have now been replaced by the uniform tax regime the Goods and Services Tax (GST)
Value Added Tax (VAT) is valid tax levied by the Central Government on the value added to a product or services before reaching to the final customers. VAT registration is mandatory and important for all traders or business those who are actively involved with manufacturing or even production of goods and services. VAT is similar to Sales Tax but it's quite different from sales tax considering that it is collected once at the time of purchasing. These days, online VAT registration is picking pace up among all those business entrepreneurs all over the country since it's really simplified and flexible in comparison to traditional methods. VAT is charged on the value addition to a product and for that a final customer has to pay as per the rules and regulations. All business organizations and manufacturing houses need to be registered as per the VAT registration act of the country in order to VAT annually. The VAT registration,is a an easy process and can be done in less or little time.
Benefits of VAT Registration
There are major advantages VAT registration for your company:
- There will be a certain authenticity associated to your company as well as other entrepreneurs through will be more comforted in doing business with you. This is a surety on your part that yes legally you are a sorted company.
- You can use ‘Set – off’ which basically the difference of the VAT given to your supplier and the VAT you receive from your customer. So in other words VAT for a particular product has to reach the Government only once. So if you have paid some VAT already you can deduct it from what your customer gave you.
- A VAT registration is required when your business turnover is more than 5 lakh INR. So it gives your company appear well established and larger. This helps appeal to more entrepreneurs and in turn help you expand.
- You become eligible for VAT refunds meaning that you can claim the taxes you have paid in an European country if you have purchased any goods there.
- You can easily see your VAT status or dealer status just by punching in your VAT number. Hence no hassles in going through all documents or receipts that when last VAT was paid.
VAT Registration Procedure
The basic steps are simple for VAT registration, but minor variations are there based on the state or city your business is located in:
- The application alongwith the documents need to be submitted to the functional local VAT office.
- Local VAT Office shall conduct an inspection of the premises within three days after submitting the application, after inspection the relevant deposit fee to be paid.
- On payment of the Professional fee deposit the TIN No. will be allotted and Certificate will be issued within a day.
Online VAT Registration Procedure:
- Log on to your state VAT website and click on the registration tab.
- Add information and attach documents as request for your company.
- You may be allocated a temporary VAT registration number.
- Once the verification is done you will be allocated your Permanent VAT registration number.
- You can check your VAT status online
VAT Registration Limit or Fees
Here is the simplistic idea of the VAT registration limit and the fees required for the same:
VAT registration fee Rs.500
- Professional Tax Rs.1000 for Proprietor, Rs.1000 for each Partners for Partnership, Rs.2500 for Private Limited / Limited.
- For turnover of Rs.0 to Rs.2.00lakhs - Rs.2000/-
- Rs. 2.00 lakhs to Rs.10.00 lakhs - Rs.3000/-
- Rs.10.00 lakhs to Rs.25.00 lakhs - Rs.6000/-
- Above Rs.25.00 lakhs - Rs.10000/-
Requirements or Documents For VAT Registration
These are the major documents that will required of you to submit with your company’s VAT registration:
- Incorporation Certificate of Company (in case of Companies)
- MoA & AoA (in case of Companies)
- Particulars of people involved in the firm.
- Address Proof of Director – Lease / Rental Agreement
- Company PAN Card / Individual PAN card in case of Proprietorship
- ID Proof of Director – Pan Card / Election Card/ Passport/ Driving License
- Rental Agreement/ Lease Agreement of Company / Proprietorship
- In case of Partnership firm- Partnership Deed
- Passport size Photograph of Director of the firm.
You would need to provide:
- Name of the Dealer
- Name of The Company
- Postal Address
- Telephone No
- EMail Address
- Details of Director/ Managing Director/ Partners / Proprietor – Address,Ph.No, eMail ID
- Details of Authorized Signatory
- PAN No of Partnership firm
- Date of Commencement of Business
- Date of Birth / Date of Incorporation – (in case of Company)
- Nature of Business
- Commodities description
- Bank Account details
- List of Directors (in case of Companies)
- Details of the Company / Individual – in case of Proprietorship
Checking VAT Registration Status
- You simply need to log on to the VAT registration website.
- Punch in your credentials or VAT number.
- The VAT status and dealer status will hence will be given to you.