VAT

VAT- Value Added Tax

Persons liable to pay tax under the VAT Acts of their respective States are required to register under the Act. On registration, a VAT number, known as VRN (VAT Registration Number) in common parlance is allotted to the applicant.

The following provisions are with reference to Punjab VAT Act, 2005:-

In addition to the regular registration, the Act allows a person to take voluntary registration for VAT, provided his turnover is above the specified threshold. However, Casual traders and persons dealing exclusively in tax-free goods are exempted from registration.

TOT: TURNOVER TAX

There is a composition scheme for small traders if they are doing business within the state only and are not registered under the Central Sales Tax Act. They can get registered for TOT (Turnover Tax).

A person registered under VAT is referred to as “Taxable Person” and a person registered under TOT is referred to as “Registered Person”. The registration number granted to person registered for VAT is referred to as “VRN/TIN ” and registration number granted to person registered for TOT is referred to as “TRN”.

LIABILITY TO VAT

Liability to VAT arises when gross turnover exceeds following:

1. Imports taxable goods for sale or use in manufacture or processing any goods in the State- Rs. 1

2. Receives goods on consignment/branch transfer from within or outside the State on which no tax is paid under the Act.-Rs. 1.

3. Is liable to pay purchase tax - Rs. 1

4. Is a manufacturer -Rs. 1,00,000
5. Is a person running a hotel / restaurant - Rs. 5,00,000
6. Is person running a bakery -Rs. 10,00,000
7. Desires voluntary registration -Rs. 5,00,000
8. Is not covered above -Rs. 50,00,000
9. Is registered under the Central Sales Tax Act -Zero

Note: A person is required to get himself registered within 30 days from the date he becomes liable to VAT under the Act.

TAXABLE QUANTUM TO TOT LIABLITY

Liability to TOT arises when gross turnover of a person in the preceding year is more than Rs. 5,00,000 but less than Rs. 50,00,000.

PROCEDURE FOR REGISTRATION

The procedure for registration is as follows:

An application for registration in Form VAT-1 is required to be filed with the designated officer in charge of the area, where business of the person seeking to obtain registration is located. The said application is to be filed within 30 days from the date when such person becomes liable to pay tax. Detailed instructions for filling up the form are contained in the form itself.

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

1. Deposit receipt of Rs. 500/- towards fees for registration. Such deposit receipt (in Form VAT-2) is to be obtained from the appropriate treasury after payment of the fee amount

2. Security in the form of:

- Bank guarantee from a local scheduled commercial bank for the amount of security

                                                         Or

- Personal Bond with two solvent sureties to the satisfaction of the designated officer for the amount of security/additional security in Form VAT-3.

Note: Rs. 100000 (50000 for tax under PVAT Act and Rs 50000 for tax under  CST Act)). The security furnished by a person can be enhanced enhanced by the designated officer for proper realization of tax while the certificate is in force. Such additional security can be demanded upto a sum of Rs. 2 lacs.

3. Copy of the constitution document e.g. partnership deed for a partnership firm, Memorandum and Articles of Association for a company.

4. Board Resolution authorizing the signatory to sign the application in case of company.

5. Proof of identification of the authorized signatory e.g. voter identity card, passport, driving license.

6. Proof of principal place of business e.g. rent receipt, lease agreement, electricity bill.

7. Two photographs for VAT and Centre —

In case of proprietorship Concern – Two Photo of Proprietor.

In case of Partnership firm :-Two Photo of all the partners,

In case of Company – Two Photo of managing director.

8. List of following categories of goods:-

-Goods to be traded.

-Goods to be manufactured.

-Goods to be purchased for use in manufacture.

Note: Every Photostat copy should be attested to be a true copy by the proprietor./partner/director as the case may be.

On satisfaction about the accuracy and completion of the application for registration, the designated officer will issue a registration certificate in Form VAT- 4 within 30 days of the date of receipt of completed application. The registration certificate will be issued for the principal place of business and a copy each for additional place/s of business

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