VAT Registration – An Overview:
Value Added Tax Registration is an indirect tax registration applicable to businesses dealing in certain goods that remain outside the GST framework. Value Added Tax (VAT) is an indirect tax imposed on the sale of certain goods. With the introduction of the Goods and Services Tax (GST) in 2017, most State VAT and sales tax systems were subsumed into the GST framework for goods and services covered by GST. However, certain goods remain outside the GST regime and continue to be subject to VAT under applicable State or Union Territory laws.
VAT is therefore not a general replacement for GST, but continues to apply to specific transactions depending on the nature of goods and the relevant State/UT provisions. Businesses dealing in such specified non-GST goods may need to obtain VAT registration, depending on the applicable State/UT law and prescribed conditions.
Is VAT Registration Still Applicable in India After GST?
Yes, VAT registration in India isstill applicable in India after the introduction of GST, but its scope is now limited. GST subsumed most State VAT and sales tax systems for goods and services covered under the GST framework. However, certain goods remain outside GST and continue to attract VAT under applicable State or Union Territory laws.
Petroleum products and alcoholic liquor for human consumption are key categories generally kept outside GST, with their taxation governed by the relevant laws. Therefore, businesses dealing in such goods may need VAT Registration depending on the applicable State/UT legislation, business activity, turnover threshold, exemptions and other prescribed conditions. VAT registration is not universally mandatory for every business dealing in these goods.
Who Needs VAT Registration in India?
- Petroleum products covered by the applicable State VAT law, such as Petroleum crude, petrol (motor spirit), high-speed diesel, aviation turbine fuel (ATF) and natural gas.
- Alcoholic liquor for human consumption, which remains outside the GST framework and subjected to State-level taxation.
Documents Required for VAT Registration:
- PAN card of the business, proprietor, partners, or directors, as applicable.
- Identity and address proof of the proprietor, partners, directors, or authorized signatory.
- Proof of business constitution, such as ownership documents, rent agreement, or utility bill.
- Bank account details, where prescribed by the applicable authority.
- Details of business activities and goods proposed to be sold.
- Photographs of the proprietor, partners, directors, or authorized signatory, where required.
- Authorization letter or board resolution, where applicable.
- Any additional documents or declarations prescribed under the relevant State/UT VAT law.
VAT Registration Process in India:
The VAT registration process in India depends on the applicable State or Union Territory VAT law and the nature of goods and transactions undertaken by the business. The general process includes:
- Identify whether the goods and transactions undertaken by the business are subject to VAT under the relevant State/UT law.
- Review the applicable turnover threshold, business category, exemptions and other conditions.
- Collect the prescribed identity, business, address, banking and transaction-related documents.
- File the VAT registration application through the applicable State/UT tax authority or prescribed portal.
- The tax authority examines the application and supporting documents.
- Once approved, the business receives its VAT registration certificate or applicable VAT identification number.
- The registered business must follow applicable invoicing, record-keeping, return filing and tax payment requirements.