Sales Tax Registration

Tax on sale of goods is known as sales tax, in the present situation of value-added tax, it is also known as the VAT. The goods which are sold within the state is known as local sale or state vat like, Delhi Vat, Karanataka Vat or Maharashtra Vat etc, whereas the goods which are sold out of state (Transfer of goods takes place between one state and another state) then this sale is known as inter state sale and the central government ley tax on these transactions hence known as Central Sales Tax (CST). Every person who sells goods in the course of local trade or interstate trade is known as a Dealer, ALl such dealers need to get themselves Sales Tax Registration with the sales tax department. Though CST is levied by the central government but is collected or say implemented by the local sales tax office.

Sales Tax Registration

Important Points on Vat Registration

  1. In Delhi, the Vat Registration is optional until 20 Lakhs of turnover
  2. In Maharashtra & Karnataka, the registration is optional until 10 Lakhs of turnover
  3. In case of CST, there is no exemption as such and it is mandatory to have the CST number before a dealer enters into an Inter-State Sale.
  4. In most of the states the registration is an online procedure, However, the department liaisoning is still necessary for issuance of TIN number
  5. Inspector visit is still necessary, However, in some states, the pre-registration visits have been suspended but are done once the registration is done.

The Procedure for Sales Tax Registration:

Step-1: A dealer has to apply to the sales tax department in the prescribed format along with all necessary documents

Step-2: The sales tax department issues a reference number or acknowledgment of having accepted the documents.

Step-3: Deposit of surety Money, in some states there is a requirement of the security deposit which need to be furnished either in form of another dealer guarantee or deposit with vat office. For Maharashtra it is 25K, and for Delhi, it is 1 Lac, the security amount can be increased by the respective commissioner of sales tax depending on the nature of the business.

Step-4: Inspection by the inspector of Vat at the premises of dealer for verification purpose

Step-5: Issuance of TIN Number after the inspector has issued a positive report.

Step-6: Issuance of original Vat Certificate

List of Documents Required for Registration

  1. Certificate of Incorporation
  2. MOA & AOA / LLP Agreement
  3. Pan Card of Company
  4. Bank Statement
  5. Cancelled Cheque
  6. Electricity Bill of the premises
  7. Rent Agreement of the premises where registration is sought
  8. Identity and Address proof of Director
  9. Photograph of the Directors (four each)
  10. Identity and Address proof of authorized signatory (if other than directors)
  11. Signature on forms
  12. List of 5 major items in which the company intends to deal with
  13. The Vat Authorities insist on filing of a Bank Guarantee/surety

Once a registration with sales tax department is obtained a dealer is under obligation to comply with all applicable provisions of vat law which are in form of Act, Rules, Notifications, Circulars & Orders. The important and most common obligations of a registered dealer are as under:

  1. Filing of Report on Monthly Basis of all purchases along with the TIN Number of the seller
  2. Filing of a Report on monthly basis of all the sales during the month along with TIN number of Buyer
  3. Payment of Tax on monthly basis
  4. Filing of quarterly return
  5. Issuance of Statutory Forms. Like Form C for interstate purchases etc
  6. Filing of VAT Audit Report if applicable
  7. Filing of stock report to the Vat Office
  8. Maintenance of proper books of account and stock records