Hi,
Suppose if a person purchase a Yarn as input (which is taxable) & manufacture Cloth from that input , (which is a tax free item), Now the question is that whether the person is required to get himself registered under VAT laws when his turnover exceeds the limit of5 lac.
Thanks & Regards
Vishal
Yes, you have to registered with Sales Tax Authority, you have to file sales tax returns showing taxfree sales and taxable purchase which is available for set off.
No VAT credit if final product is exempt - Credit of tax paid on inputs is available only if tax is paid on final products. Thus, when final product is exempt from tax, credit will not be availed. If availed, it will have to be reversed on pro-rata basis.
Dealers having turnover exceeding 5 lakhs should get themselves registered within 30 days from the date of liability to get registered. (The threshold limit may vary from state to state).
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yes, they have to register if turnover exceeds 5 laks.
No u can't .Credit of tax paid on inputs is available only if tax is paid on final products. Thus, when final product is exempt from tax, credit will not be availed.
If your turnover exceed from exemption limit. Get Registered with sales tax deptt.
As per Section 2 (a) of Mvat rule 53 if claiment dealer manufacturing any tax free goods then an amount equal to three per cent of the purchase price of the corresponding taxable goods purchase purchased by him (not being goods treated as capital asset or used as fuel) shall be reduce from the amount of set-off otherwise available in respect of the said purchase.
If your Yarn input is capitalised then full set-off is available
Reduction rate is decided by Central Sales Tax Act u/s 8(1)
You have to registered as sales are going to cross the limit of 5 lakh..
Otherwise not required.. In the absense of Non- reg.. u r not applicable to take advantage of Input Tax & ur cost increase , as the same u are also not authorise to use Tax Invoice means u can't charge sale tax on ur sale..
Dear Friends
If Tax in NIL then you required to take VAT Number & file returns
If Good is not taxable under VAT like House, etc. then no need to take VAT number
VAT Number Liability doesnt depend on Tax Amonut, etc.
Regards
CAclubindia
