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Vat on assets sales

Sriharsha (0) (24 Points)

24 January 2012

We have a Private Limited company based out of Bangalore which we are closing down as two main investros are no more interested in running this business. In the process, we would like to sell our assets (more of computers & IT related assets)which has a decent value. We are not registered with Vat as we don't have any domestic sales as we are doing Medical transcripttion work & few other data entry related job to overseas clients. In the process of selling assets do we need to pay VAT or collect VAT ? By the way assets are sold less than book value.

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12 Replies

Vikky (CHARTERED ACCOUNTANT) (145 Points)
Replied 24 January 2012

As far as my knowledge goes in case of selling the assets you need not charge VAT as this is your fixed asset not your commodity in which you deal. As you are not collecting VAT you are not require to pay VAT

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 January 2012

Dear Vikas,

Why do you say VAT is not applicable? Computers etc., are movable goods and therefore would definitely attract VAT.

If the business as a whole is being sold as a going concern, without valuing individual assets of the business, then it will qualify as a 'slump sale' and therefore would not attract VAT.

However, the querist says that they are closing down the business and because of that they want to sell away the Computers etc. Therefore it will definitely attract VAT.

Regards,

RAJESH CHOUDHARY.

Vikash Kumar (Manager Accounts (CA. Final)) (694 Points)
Replied 24 January 2012

VAT applicable only if VAT input credit claimed at the time of purchase.

RAJU (LEARNER) (1089 Points)
Replied 24 January 2012

Irrespective of whether credit is claimed or not, VAT would be payable if the turnover during the exceeds the specified limit (as prescribed by the respective States).

The definition of dealer includes even those who effect sale of any goods otherwise than in the regular course of their business.

1 Like

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 25 January 2012

Dear Friends,

I have given my answer in the first post itself. If is only sale of computers and other IT related assets, then it will attract VAT.

If the entire business is being sold (including all its assets and liabilities) as a going concern, then it is a slump sale and exempted from sales tax...

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Ramanuj (Accountant.) (834 Points)
Replied 25 January 2012

Dear all

I Think Its is service provided co. its company does not have sales or purchased. If any Concern have turn over more than 10 lac than must be registered in Under Vat. Less than 10 lac turnover , not need applible vat. so that its company sold all assets then not applicable Vat.

Thanks

Regards

Ramanuj

Vikky (CHARTERED ACCOUNTANT) (145 Points)
Replied 25 January 2012

Dear RAJESH CHOUDHARY

VAT is applicable if you are selling your goods in which you deal in normal course of business so VAT wont be applicable on this sale and i agree that Computers etc.are VATABLE goods...the reply of Dharmaraju is correct...agree with it

2 Like

Ramanuj (Accountant.) (834 Points)
Replied 25 January 2012

Dear all

Thanks

Regards

Ramanuj

girendra mohan (laxmi nagar) (21 Points)
Replied 27 January 2012

mr. rajesh...

u r using the concept of capital gain....

I agree with the ans of vikash pipara.....

anil jain (Partner) (1072 Points)
Replied 18 February 2012

u/s 6(3) of DVAT "SALES EXEMPT FROM TAX" described as

"Where a dealer sales capital goods which he has used since the time of purchase exclusively for the purposes other than making non-taxed sale of goods, and has not claimed a tax credit in respect of such capital goods u/s 9, the sale of such capital goods shall be exempt from tax.

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vivekanandhan (DCTO) (39 Points)
Replied 20 February 2012

Sale value of the assets is the criteria.If your sale value exceeds your state sales tax limit,you have to collect VAT at applicable rates and to pay.