VAT stands for Value Added Tax. This tax is charged by the Central Government on the sale of goods and services when they are ultimately sold to the final consumers. VAT is charged and paid by the producers of the goods and services but it is finally levied on consumers who purchase the goods and services when they pay for them.
WHAT IS VAT REGISTRATION?
VAT Registration is made compulsory as well as important for all those manufacturers who are solely involved in the process of production of goods and services. VAT Registration means the process of listing with the Government as a company eligible for the return of VAT. A person may get confused between VAT and sales tax since both taxes are related with the sale of goods and services. But sales tax is charged only once when the end user purchases the goods or services. On the other hand, VAT is charged at different levels of production hence it is called a multipoint tax. The VAT Registration Act has made it compulsory for all business organisations to get themselves registered for VAT payments. Nowadays, VAT Registration can be done online and it is becoming popular among business entrepreneurs since it is easy and time effective.
DOCUMENTS REQUIRED FOR VAT REGISTRATION
The important documents that are required at the time of VAT registration are as follows:
While applying for VAT registration, the company is also required to submit the following information:
VAT REGISTRATION PROCEDURE
In India, Tax credit method is used for Vat assessment and collection. For different categories of products and services, the basic rate of value added tax ranges between 4% and 12.5%.
VAT REGISTRATION FEES
The amount of fees that is required at the time of VAT registration is as follows:
WHAT ARE THE BENEFITS OF VAT REGISTRATION?
VAT Registration offers the following benefits to the company which are:
1. Legally secured-If a company has VAT registration then there will be authenticity associated with the company and the business entrepreneurs would be more comfortable in carrying on their business. There would be a sense of being legally secured.
2. Set off-The Company can easily set-off the difference of the VAT that has been given to the supplier and the VAT that the company received from the customers. VAT for a product has to be paid to the Government only once. So if the company has already paid VAT then it can deduct it from what the customers gave to the company.
3. Clear image of the company-When the business turnover is more than Rs.5.00 lakhs, VAT registration is mandatory which gives a clear image about the company and helps define its image as an established company.
4. Expansion of the business-VAT registration depicts the company to be more established and larger which helps appeal to more entrepreneurs and in turn helps in expansion of the company.
5. VAT refund-VAT registration makes the company eligible for VAT refunds which it can claim against the taxes paid in the European countries if the company has purchased any assets from them.
6. VAT status-When the company has completed VAT registration, it helps the company to check their VAT status online by using just the VAT number of the company. The benefit which the company gets is that there is no hassle in going through all the documents and receipts of the company to check when VAT was paid previously.
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