New firm
This query is : Resolved
11 March 2012
Hi,
i have opened a new firm in partnership with my friend.the business is in plasters and we supply labour and material.now we have to submit our bill but we havent registered for any vat no or a sales tax or service tax number.if anybody could help as i am a goner with taxation.
Thanks
i have opened a new firm in partnership with my friend.the business is in plasters and we supply labour and material.now we have to submit our bill but we havent registered for any vat no or a sales tax or service tax number.if anybody could help as i am a goner with taxation.
Thanks
11 March 2012
If your turnover is below tax limit for VAT and service tax then you dont have to register for those. you can simply provide the bills.
The limit of turnover for service tax registration is 8 lacs, while for sales tax it depends on state law.
The limit of turnover for service tax registration is 8 lacs, while for sales tax it depends on state law.
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11 March 2012
Thanks for the answer ,however is sales tax and vat different from each other?my business is based in bombay and it involves providing both material and labour ,so what should i get ,a vat number or a service tax number?
04 August 2024
In your case, understanding the distinction between Sales Tax, VAT, and Service Tax, as well as the registration requirements, is essential for compliance. Here’s a breakdown to guide you:
### 1. **Sales Tax vs. VAT**
- **Sales Tax**: Traditionally, sales tax was levied on the sale of goods. However, in most states in India, it has been largely replaced by VAT (Value Added Tax). Sales tax may still apply in some specific situations or historical contexts.
- **VAT (Value Added Tax)**: VAT is a form of indirect tax on the value added at each stage of the supply chain, from production to the final sale. It applies to the sale of goods and some services.
### 2. **Service Tax**
- **Service Tax**: This tax is levied on services provided. If your business involves providing services, such as labor or other professional services, service tax would generally apply.
### 3. **Your Business Scenario**
Since your business involves supplying both labor and material (plastering services), you'll need to address both VAT and Service Tax requirements:
#### **VAT Registration**
1. **When Required**: You need VAT registration if your business involves the sale of goods, such as plasters and other materials. The VAT system is state-specific, so you'll need to register with the Maharashtra Sales Tax Department.
2. **Process**:
- **Application**: Apply for VAT registration through the Maharashtra Goods and Services Tax (GST) portal or the local Sales Tax Office.
- **Documents Needed**: Typically, you will need to provide proof of identity, address proof, business registration documents, and details of your business activities.
- **VAT Number**: Once registered, you will receive a VAT number which should be quoted on all invoices.
#### **Service Tax Registration**
1. **When Required**: Service tax is applicable if you provide taxable services. Since your business involves providing labor services, you will need to obtain a Service Tax registration.
2. **Process**:
- **Application**: Apply for Service Tax registration with the Service Tax Department through the CBEC-GST portal.
- **Documents Needed**: You will need to provide proof of identity, address proof, business documents, and details of services offered.
- **Service Tax Number**: After registration, you will receive a Service Tax number which should be included on your invoices for services provided.
### 4. **Current Status and Steps Forward**
1. **Immediate Action**:
- **Register for VAT**: Contact the Maharashtra Sales Tax Department or visit their online portal to begin the registration process.
- **Register for Service Tax**: Similarly, apply for Service Tax registration through the CBEC-GST portal.
2. **Invoice Issuance**:
- **Include Tax Details**: Ensure that once you obtain the VAT and Service Tax numbers, you include them on all future invoices. For past invoices issued before registration, you may need to address them with your clients and inform them of the forthcoming tax registration details.
3. **Compliance**:
- **Tax Filing**: Regularly file VAT and Service Tax returns as required by the regulations. Keep accurate records of all transactions and taxes collected.
4. **Consultation**:
- **Professional Help**: It may be beneficial to consult with a tax professional or accountant who specializes in VAT and Service Tax to ensure compliance and proper filing.
### Summary
- **VAT Registration**: Required for the sale of goods (e.g., plasters).
- **Service Tax Registration**: Required for providing services (e.g., labor).
- **Application**: Register with the respective departments for VAT and Service Tax.
- **Compliance**: Ensure all future invoices include the tax numbers and maintain proper records.
By getting the necessary registrations and complying with tax requirements, you will avoid penalties and ensure smooth operation of your business.
### 1. **Sales Tax vs. VAT**
- **Sales Tax**: Traditionally, sales tax was levied on the sale of goods. However, in most states in India, it has been largely replaced by VAT (Value Added Tax). Sales tax may still apply in some specific situations or historical contexts.
- **VAT (Value Added Tax)**: VAT is a form of indirect tax on the value added at each stage of the supply chain, from production to the final sale. It applies to the sale of goods and some services.
### 2. **Service Tax**
- **Service Tax**: This tax is levied on services provided. If your business involves providing services, such as labor or other professional services, service tax would generally apply.
### 3. **Your Business Scenario**
Since your business involves supplying both labor and material (plastering services), you'll need to address both VAT and Service Tax requirements:
#### **VAT Registration**
1. **When Required**: You need VAT registration if your business involves the sale of goods, such as plasters and other materials. The VAT system is state-specific, so you'll need to register with the Maharashtra Sales Tax Department.
2. **Process**:
- **Application**: Apply for VAT registration through the Maharashtra Goods and Services Tax (GST) portal or the local Sales Tax Office.
- **Documents Needed**: Typically, you will need to provide proof of identity, address proof, business registration documents, and details of your business activities.
- **VAT Number**: Once registered, you will receive a VAT number which should be quoted on all invoices.
#### **Service Tax Registration**
1. **When Required**: Service tax is applicable if you provide taxable services. Since your business involves providing labor services, you will need to obtain a Service Tax registration.
2. **Process**:
- **Application**: Apply for Service Tax registration with the Service Tax Department through the CBEC-GST portal.
- **Documents Needed**: You will need to provide proof of identity, address proof, business documents, and details of services offered.
- **Service Tax Number**: After registration, you will receive a Service Tax number which should be included on your invoices for services provided.
### 4. **Current Status and Steps Forward**
1. **Immediate Action**:
- **Register for VAT**: Contact the Maharashtra Sales Tax Department or visit their online portal to begin the registration process.
- **Register for Service Tax**: Similarly, apply for Service Tax registration through the CBEC-GST portal.
2. **Invoice Issuance**:
- **Include Tax Details**: Ensure that once you obtain the VAT and Service Tax numbers, you include them on all future invoices. For past invoices issued before registration, you may need to address them with your clients and inform them of the forthcoming tax registration details.
3. **Compliance**:
- **Tax Filing**: Regularly file VAT and Service Tax returns as required by the regulations. Keep accurate records of all transactions and taxes collected.
4. **Consultation**:
- **Professional Help**: It may be beneficial to consult with a tax professional or accountant who specializes in VAT and Service Tax to ensure compliance and proper filing.
### Summary
- **VAT Registration**: Required for the sale of goods (e.g., plasters).
- **Service Tax Registration**: Required for providing services (e.g., labor).
- **Application**: Register with the respective departments for VAT and Service Tax.
- **Compliance**: Ensure all future invoices include the tax numbers and maintain proper records.
By getting the necessary registrations and complying with tax requirements, you will avoid penalties and ensure smooth operation of your business.
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