Vat Registration

Definition of VAT (Value Added Tax)

The Value Added Tax(VAT) is a form of the indirect tax, and takes into account the multiple sales taxes connected with a product. VAT reckons the sales taxes in a different manner, but includes the taxes comprehensively.

Persons liable to pay taxes

• Any person or body who, for the purposes of or consequential to his involvement in or in connection with his occupation or business, buys or     sells goods or products directly or indirectly, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes.  
• Any mercantile of other agent, broker, or commission agent.
• A resident or non-resident dealer or his agent.
• A society, co-operative or otherwise, or institution, association, or club.
• A casual trader or even an auctioneer.
• An organization, institution, banking or insurance companies, if they are involved in buying, selling, or    supplying goods.
• A person or organization who disposes any type of goods or products as unclaimed or confiscated, or    unserviceable or scrap, surplus, old or antiquated, obsolete or as discarded or rejected material or    waste goods or products by way or process of sale.

Transactions considered liable for tax under the DVAT Act-Sales

According to the section 2(1)(zc), the term “Sale” includes the following transactions:
• The transfer of property in goods or by one person to another
• The transfer of property by an auctioneer, bank, or insurance company
• The transfer of goods or products on the hire-purchase basis or other system of installments
• The supply of goods or products by a society, co-operative or other, club, firm, organization, or any   association to its members
• The transfer of goods or products, otherwise than in pursuance of a contract or agreement
   Work contract transactions
• Leasing – Transfer of right to use goods or products
• Transfer or supply of any goods, products, or even food items, etc. in any way or manner
• Any type of disposal of goods and products as unclaimed or confiscated, or unserviceable or scrap,    surplus, old or antiquated, obsolete or old-fashioned, or as discarded material or waste goods or    products.

Compulsory Registration

Every person, body, or organization is bound to apply for registration, according to the DVAT Act- Sales, if:

Taxable Quantum

Section Circumstances Taxable Quantum (Rs.) a 16A(7) Casual trader as defined u/s 2(1)(g) NIL b 18(2) Dealer who imports any goods for sale in Delhi NIL c 18(2) Any other dealer 10,00,000.00

In the case of persons, contractors, or dealers, involved in the contract processes and activities, the Taxable Quantum signifies the gross turnover, which is the turnover without the deduction for labor and various services.   
As per the section 18(3) of the DVAT Act, the Taxable Quantum shall not include turnover from the following:
(a) Sales of capital assets.
(b) Sales made in course of winding up of dealer’s activities.
(c) Sales made as part of the permanent diminution of the dealer’s activities.