LIABILITY FOR URD PERIOD
This query is : Resolved
04 November 2009
As we all know that VAT Regn is compulsory if ur Sales Turnover exceeds Rs.5lacs. MVAT Registration can be done vuluntsrily or on turnover basis when the turnover exceed Rs.5lacs.
My querry is that suppose a dealer has started a new business and his first sale bill is of apx Rs.7lacs so what will be his liability on sales exceeding Rs.5lacs
My querry is that suppose a dealer has started a new business and his first sale bill is of apx Rs.7lacs so what will be his liability on sales exceeding Rs.5lacs
13 November 2009
If first bill itself has exceeded the minimum limit of Turnover than tax should have been charged on complete bill amount.
13 November 2009
but he is an URD dealer so how can he collect tax without vat no.
02 August 2024
In the context of VAT (Value Added Tax) and Maharashtra VAT (MVAT), here's how to handle the situation when a dealer starts a new business and their first sale bill exceeds the threshold of Rs. 5 lakhs:
### **1. VAT Registration Requirement**
- **Compulsory Registration:** As per VAT regulations in Maharashtra, if a dealer's turnover exceeds Rs. 5 lakhs, they are required to obtain VAT registration. This registration should ideally be done as soon as the turnover reaches or is expected to exceed this threshold.
- **Voluntary Registration:** A dealer can also choose to register voluntarily even if the turnover does not exceed Rs. 5 lakhs. This can be advantageous for claiming input tax credits and complying with legal requirements.
### **2. Liability on Sales Exceeding Rs. 5 Lakhs**
- **Sales Exceeding Threshold:** If the dealer's first sale bill is Rs. 7 lakhs, they should have been registered for VAT before issuing the bill. If the registration is not yet obtained, the dealer should still be compliant with VAT laws, but there are specific implications:
1. **VAT Collection:** Without a VAT registration number, the dealer cannot legally collect VAT from customers. However, they are still liable to pay VAT on sales if they cross the turnover threshold.
2. **Tax Liability:** The dealer will have to account for VAT on the sales made once the turnover exceeds Rs. 5 lakhs. They will need to pay the VAT amount from their own funds or adjust it against the amount collected from customers (if VAT was collected).
### **3. URD (Unregistered Dealer) Status**
- **URD Dealers:** An URD (Unregistered Dealer) status means the dealer has not obtained VAT registration and is not entitled to collect VAT from customers. They cannot issue VAT invoices or collect VAT.
- **Tax Collection:** If the dealer is still unregistered and their sales exceed the threshold, they cannot collect VAT from the customer until they are registered. The VAT liability remains, but it must be handled appropriately, usually by paying VAT from their own funds.
- **Impact on Business:** Being an URD and making sales over Rs. 5 lakhs without registration means the dealer might face penalties or legal issues for non-compliance. They should expedite the registration process to avoid such issues and to start collecting VAT properly.
### **4. Steps to Take**
1. **Apply for VAT Registration:** The dealer should immediately apply for VAT registration to comply with the legal requirements. The application can be done online or through the respective VAT department.
2. **Pay VAT:** For sales made before obtaining VAT registration, the dealer will need to pay VAT from their own funds. This involves paying VAT on sales exceeding the threshold as per the applicable VAT rate.
3. **Update Invoices:** Once registered, the dealer should start issuing VAT invoices, collect VAT from customers, and file VAT returns regularly.
4. **Consult a Tax Professional:** It is advisable to consult a tax professional or VAT consultant to handle the registration process, calculate VAT liabilities, and ensure compliance with VAT regulations.
### **Summary**
- **Without VAT Registration:** The dealer cannot collect VAT legally if they are not registered, even if their turnover exceeds Rs. 5 lakhs. They should register immediately to comply with VAT laws.
- **Pay VAT:** VAT on sales made should be accounted for and paid from their own funds until registration is complete.
- **Consult Professionals:** Seek advice from tax professionals to ensure proper handling of VAT obligations and registration.
Taking these steps will help ensure compliance with VAT regulations and avoid potential penalties or legal issues.
### **1. VAT Registration Requirement**
- **Compulsory Registration:** As per VAT regulations in Maharashtra, if a dealer's turnover exceeds Rs. 5 lakhs, they are required to obtain VAT registration. This registration should ideally be done as soon as the turnover reaches or is expected to exceed this threshold.
- **Voluntary Registration:** A dealer can also choose to register voluntarily even if the turnover does not exceed Rs. 5 lakhs. This can be advantageous for claiming input tax credits and complying with legal requirements.
### **2. Liability on Sales Exceeding Rs. 5 Lakhs**
- **Sales Exceeding Threshold:** If the dealer's first sale bill is Rs. 7 lakhs, they should have been registered for VAT before issuing the bill. If the registration is not yet obtained, the dealer should still be compliant with VAT laws, but there are specific implications:
1. **VAT Collection:** Without a VAT registration number, the dealer cannot legally collect VAT from customers. However, they are still liable to pay VAT on sales if they cross the turnover threshold.
2. **Tax Liability:** The dealer will have to account for VAT on the sales made once the turnover exceeds Rs. 5 lakhs. They will need to pay the VAT amount from their own funds or adjust it against the amount collected from customers (if VAT was collected).
### **3. URD (Unregistered Dealer) Status**
- **URD Dealers:** An URD (Unregistered Dealer) status means the dealer has not obtained VAT registration and is not entitled to collect VAT from customers. They cannot issue VAT invoices or collect VAT.
- **Tax Collection:** If the dealer is still unregistered and their sales exceed the threshold, they cannot collect VAT from the customer until they are registered. The VAT liability remains, but it must be handled appropriately, usually by paying VAT from their own funds.
- **Impact on Business:** Being an URD and making sales over Rs. 5 lakhs without registration means the dealer might face penalties or legal issues for non-compliance. They should expedite the registration process to avoid such issues and to start collecting VAT properly.
### **4. Steps to Take**
1. **Apply for VAT Registration:** The dealer should immediately apply for VAT registration to comply with the legal requirements. The application can be done online or through the respective VAT department.
2. **Pay VAT:** For sales made before obtaining VAT registration, the dealer will need to pay VAT from their own funds. This involves paying VAT on sales exceeding the threshold as per the applicable VAT rate.
3. **Update Invoices:** Once registered, the dealer should start issuing VAT invoices, collect VAT from customers, and file VAT returns regularly.
4. **Consult a Tax Professional:** It is advisable to consult a tax professional or VAT consultant to handle the registration process, calculate VAT liabilities, and ensure compliance with VAT regulations.
### **Summary**
- **Without VAT Registration:** The dealer cannot collect VAT legally if they are not registered, even if their turnover exceeds Rs. 5 lakhs. They should register immediately to comply with VAT laws.
- **Pay VAT:** VAT on sales made should be accounted for and paid from their own funds until registration is complete.
- **Consult Professionals:** Seek advice from tax professionals to ensure proper handling of VAT obligations and registration.
Taking these steps will help ensure compliance with VAT regulations and avoid potential penalties or legal issues.
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