Brief Info About VAT CST (TIN)

Value added tax is levied on the sale of movable goods. Most of the Indian States have replaced Sales tax with a new Value Added Tax (VAT) from April 01, 2005. VAT is imposed on goods only and not services and it has replaced sales tax. VAT is applied on each stage of sale with a mechanism of credit for the input VAT paid. VAT is a progressive and transparent system of taxation which eliminates the cascading impact of multiple taxation through a multipoint taxation and set-off principle. It promotes transparency, compliance and equity and therefore, is both dealer friendly and consumer friendly. After registration of VAT, the manufacturer or trader is allotted a unique 11 digit number which will serve as the VAT Number / TIN Number / CST Number for the business.

The VAT system levies tax on every level of Value addition to the product or good. At the same time the tax paid for acquiring this product or good will be allowed as tax credit and can be used for payment of VAT at the time of selling the product or good to the immediate dealer. The net effect of tax will be only on the portion of Value added by the seller. The following example clearly explains the flow of VAT system and its effect on the Selling price.

Example -

Mr. A, a registered dealer purchased one good at Rs. 1,000 by paying 4% tax on it, i.e., Rs. 40. The tax paid by him can be claimed as input tax credit. On the good purchased, he did some value addition worth Rs. 500. The VAT liability after such value addition amounted to Rs. 60, i.e. 4% on Rs. 1,500. Since there is a credit of Rs. 40 on the initial purchase made, the same can be adjusted against Rs. 60. Only the balance amount of Rs.20 needs to be paid to the department

VAT Registration

VAT registration Contains TIN (Tax Identification Number) which is required to issue Tax invoices to other parties and get the benefit of input tax credit.

VAT Audit

In Maharashtra if the turnover exceeds a specified limit (Rs. 100 lakhs in most cases) and a Report on the same is to be submitted with the VAT authorities as VAT Audit report and same need to be certified by chartered Accountant.

VAT Returns

In VAT Monthly / Quarterly / Six monthly VAT Returns are required to be filed within due date with specifying taxes collected and paid to government treasury.

No VAT on Export

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. See more at: https://ventureasy.com/VAT#sthash.UYoLbRcD.dpuf

Frequently Asked Questions (FAQs)

What is Maharashtra Value Added Tax?

VAT is value added tax, a tax levied on the sale of goods in India. 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.

What is the VAT rate on goods?

The VAT rate will depend on the type of goods being sold and the State in which the goods is being sold. Rate can be checked with annexure provided by department of rate applicable on goods.

What is Maharashtra VAT registration?

VAT Registration is a State level registration for paying VAT, which is mandatory for manufactures and traders having an annual turnover (Sale or purchases) of more than 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.

How long does it take to obtain VAT registration?

VAT Registration is issued by the Maharashtra Government. Therefore, based on the State, the processing time for obtaining VAT Registration will differ. In general, VAT Registration can be obtained in 3 – 4 working days.