Nature of business
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 January 2015
My friend is having printing work
He doesn't have his own printing press, he just take the order from his clients, buy the material (like visiting card, paper etc) from the market and give the material & provide designing to printing press. Take the printed material from the printing press and handover after packaging to his client. He also provide gift items (diaries after printing on the same as per client requirement) & stationary in bulk to his clients.
Whether his work will be categorized under contractors/ job work
or
Printing related work as job work and stationary & gift items as trading business.
He doesn't have his own printing press, he just take the order from his clients, buy the material (like visiting card, paper etc) from the market and give the material & provide designing to printing press. Take the printed material from the printing press and handover after packaging to his client. He also provide gift items (diaries after printing on the same as per client requirement) & stationary in bulk to his clients.
Whether his work will be categorized under contractors/ job work
or
Printing related work as job work and stationary & gift items as trading business.
07 January 2015
It will be taxable under Income From Business and professional within the Section 28.
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 January 2015
Printing Jobwork
Gross receipt from business exceeding Rs. 10 lacs as it is not possible to bifurcate the amount received between material used (like visting cards and papers etc.)and printing services.
Please suggest whether he is required to get Sale Tax/VAT Registration no. or service tax Registration no.
Gross receipt from business exceeding Rs. 10 lacs as it is not possible to bifurcate the amount received between material used (like visting cards and papers etc.)and printing services.
Please suggest whether he is required to get Sale Tax/VAT Registration no. or service tax Registration no.
03 August 2024
Based on the nature of your friend's business, here's how the categorization of activities and tax obligations could be handled:
### **Business Classification:**
1. **Printing Work:**
- **Nature:** Your friend is primarily engaged in facilitating printing services by acting as a middleman between the clients and the printing press.
- **Classification:** This activity is typically classified as **Job Work** in the printing industry, since he is outsourcing the printing to a third party. In this context, he arranges for the printing services and handles the order but does not directly operate the printing press.
2. **Gift Items & Stationery:**
- **Nature:** Your friend also provides stationery and gift items, including diaries with custom printing.
- **Classification:** The sale of stationery and gift items, even if customized, is considered **Trading**. This involves buying goods (stationery and gifts) and selling them to clients.
### **Tax Registration Requirements:**
1. **VAT/Sales Tax Registration:**
- **Requirement:** If your friend's gross receipts exceed Rs. 10 lakhs and considering that he is trading in goods (stationery and gift items), he would need to get **VAT/Sales Tax registration**. VAT/Sales Tax registration is required for businesses involved in the sale of goods.
- **Applicability:** He should register for VAT/Sales Tax in the state where he is conducting his business operations.
2. **Service Tax Registration:**
- **Requirement:** Service Tax registration is required if the business provides taxable services. In the case of your friend, the service provided is printing, which falls under **Taxable Services** if it meets the threshold limit.
- **Threshold Limit:** For service providers, if the aggregate turnover exceeds Rs. 10 lakhs (Rs. 20 lakhs for some states), Service Tax registration is mandatory.
### **Steps to Take:**
1. **Determine Gross Receipts:**
- Calculate the gross receipts from both the job work (printing services) and trading (stationery and gift items). Since the total gross receipts exceed Rs. 10 lakhs, registration for VAT/Sales Tax and Service Tax is advisable.
2. **Apply for Registrations:**
- **VAT/Sales Tax:** Apply for VAT/Sales Tax registration with the local VAT authority in the state of operation.
- **Service Tax:** Apply for Service Tax registration with the Central Board of Excise and Customs (CBEC) if the turnover exceeds the threshold limit.
3. **Maintain Records:**
- Keep detailed records of all transactions, including the purchase of materials, sales of goods, and provision of printing services. This will be crucial for tax filings and compliance.
4. **Consult a Tax Professional:**
- It’s always a good idea to consult with a tax professional or accountant who can provide tailored advice based on the specifics of the business and ensure compliance with all tax obligations.
### **Summary:**
- **Printing Services:** Classified as job work; requires Service Tax registration if applicable.
- **Stationery & Gift Items:** Classified as trading; requires VAT/Sales Tax registration.
Given that the gross receipts exceed Rs. 10 lakhs, both VAT/Sales Tax and Service Tax registrations are likely necessary.
### **Business Classification:**
1. **Printing Work:**
- **Nature:** Your friend is primarily engaged in facilitating printing services by acting as a middleman between the clients and the printing press.
- **Classification:** This activity is typically classified as **Job Work** in the printing industry, since he is outsourcing the printing to a third party. In this context, he arranges for the printing services and handles the order but does not directly operate the printing press.
2. **Gift Items & Stationery:**
- **Nature:** Your friend also provides stationery and gift items, including diaries with custom printing.
- **Classification:** The sale of stationery and gift items, even if customized, is considered **Trading**. This involves buying goods (stationery and gifts) and selling them to clients.
### **Tax Registration Requirements:**
1. **VAT/Sales Tax Registration:**
- **Requirement:** If your friend's gross receipts exceed Rs. 10 lakhs and considering that he is trading in goods (stationery and gift items), he would need to get **VAT/Sales Tax registration**. VAT/Sales Tax registration is required for businesses involved in the sale of goods.
- **Applicability:** He should register for VAT/Sales Tax in the state where he is conducting his business operations.
2. **Service Tax Registration:**
- **Requirement:** Service Tax registration is required if the business provides taxable services. In the case of your friend, the service provided is printing, which falls under **Taxable Services** if it meets the threshold limit.
- **Threshold Limit:** For service providers, if the aggregate turnover exceeds Rs. 10 lakhs (Rs. 20 lakhs for some states), Service Tax registration is mandatory.
### **Steps to Take:**
1. **Determine Gross Receipts:**
- Calculate the gross receipts from both the job work (printing services) and trading (stationery and gift items). Since the total gross receipts exceed Rs. 10 lakhs, registration for VAT/Sales Tax and Service Tax is advisable.
2. **Apply for Registrations:**
- **VAT/Sales Tax:** Apply for VAT/Sales Tax registration with the local VAT authority in the state of operation.
- **Service Tax:** Apply for Service Tax registration with the Central Board of Excise and Customs (CBEC) if the turnover exceeds the threshold limit.
3. **Maintain Records:**
- Keep detailed records of all transactions, including the purchase of materials, sales of goods, and provision of printing services. This will be crucial for tax filings and compliance.
4. **Consult a Tax Professional:**
- It’s always a good idea to consult with a tax professional or accountant who can provide tailored advice based on the specifics of the business and ensure compliance with all tax obligations.
### **Summary:**
- **Printing Services:** Classified as job work; requires Service Tax registration if applicable.
- **Stationery & Gift Items:** Classified as trading; requires VAT/Sales Tax registration.
Given that the gross receipts exceed Rs. 10 lakhs, both VAT/Sales Tax and Service Tax registrations are likely necessary.
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