Registration under VAT (Value Added Tax)

Registration under VAT (Value Added Tax)Registration is a process of obtaining certificate of registration from the authorities under VAT Acts. A dealer registered under the VAT Acts is called a registered dealer. Any dealer, who intends to carry on the business of purchase and sale of goods in the State and is liable to pay tax, cannot carry on the business unless he is registered and holds a valid registration certificate under the Act.

Dealer – A dealer means any person, who consequent to, or in connection with, or incidental to, or in the course of his business, buys or sells goods for consideration or otherwise.

All sales or purchase of goods made within the State except the exempted goods would be subjected to VAT.

Eligibility for registration –

Registration under VAT of dealers is compulsory whose gross annual turnover is above Rs. 5lakh. Provision has been initiated for voluntary registration also. All existing dealers will be automatically registered under the VAT Act. A new dealer will be allowed 30 days time from the date of liability to get registered. An application for registration should be made to the VAT Commissioner.

No need of compulsory registration for small dealers whose gross annual turnover is less than Rs. 5lakh. Also, the Empowered Committee of State Finance Minister subsequently allowed the States to increase the threshold limit for the small dealers to Rs. 10lakh with the condition that the concerned State would bear the revenue loss, on account of increase in limit beyond Rs. 5lakh.

Types of Registration –

1)  Compulsory registration – If an assessee fails to obtain registration under the VAT Act, he may be registered compulsorily by the Commissioner. The Commissioner may assess the tax due from such person on the basis of evidence available with him. In this case the assessee shall have to forthwith pay such amount of tax. Also, failure to get registered shall result in attracting default penalty and forfeiture of eligibility to set off all input tax credit related to the period prior to the compulsory registration.

2)  Voluntary registration – A dealer not eligible for registration may also obtain registration if the Commissioner is satisfied that the business of the applicant requires registration. The Commissioner may also impose any terms or conditions that he thinks fit.

Cancellation of Registration –

The registration can also be cancelled on –

a)      Discontinuance of business

b)      Disposal of business

c)      Transfer of business to new location

d)      Annual turnover of a manufacturer or a trader dealing in designed goods or services falling below the specified amount.

3 thoughts on “Registration under VAT (Value Added Tax)”

  1. Dear sir,
    I am a manufacturer of baking powder and few other bakery products. i have a very nominal gross profit of approx 15 %..
    My monthly turnover is approx 2 lakh. so my profit is Rs 30 approx. thousand / month.
    In west Bengal baking powder VAT is 13.5% as the product is not in the West Bengal VAT schedule.
    My problem is, my monthly TAX is around Rs. 27000. which is very hard for me to pay all the time..
    I don’t want to be a defaulter and like to pay my taxes in time but i cant get out of this horrible situation. Sir, i will be highly obliged if you can help me to get out of this situation.
    Please help me in this matter.

    1. Hi,

      We understand as per your Query that you want to reduce your Tax Liability. In this regard, these are following measures that can be taken care of –
      1. To reduce your tax liability we would suggest you to book more expenses as much as you can.
      2. If you want to keep your profit margin below 15%, then try to show some of your sales in cash so that the same may not be accounted for and accordingly it will reduce your VAT Liability also.
      3. We would further suggest if there are any inputs on purchase of materials which are not yet taken can be incorporated as expenses in the books of accounts.

      Thanks and Regards,
      Team Taxmantra
      Call Us: +91 923 0033 070
      Email Us:

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