Tax

What is Value Added Tax (VAT)?

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987

HDFC Life explains definition and meaning for Service Tax which is a type of indirect tax collected by the Indian Government.

  • What is VAT?

    VAT or Value Added Tax is a type of tax that is charged by the Central Government on the sale of services and goods to the consumers. VAT is paid by the producers of services and goods, but it is finally imposed on the consumers who purchase the services and goods when they pay for it.
  • What is VAT registration?

    Registration of VAT is mandatory for all manufacturers who are solely involved in the production of goods and services. The registration process means listing the company with the Government as a corporation eligible for return of VAT. Sales tax and VAT are different, the former is charged only when the end user purchases the services or goods, whereas VAT is applicable at different stages of the production process, which is also known as a multipoint tax. According to the VAT registration Act, it’s mandatory for all business organizations to be registered for VAT payments. With the advent of Digital India, VAT registrations can be done online too and is proving to be a boon to business entrepreneurs as it’s convenient and time-effective.
  • What is VAT registration procedure?

    In India, the  Income Tax  credit system is used to asses and collect VAT. The value ranges from 4% to 12.5% for different categories of products and services. Following are the basic steps required for VAT registration -
    • The application required for VAT registration must be filled completely with proper information and submitted to your local VAT office along with all the required documents
    • Post submission of documents and application, the VAT office will conduct a thorough inspection of the premises. This will be done within 3 days of submission
    • Following approval of inspection, a deposit fee will be have to be paid to the VAT office
    • After paynment, a TIN number will be allotted and within a day the VAT certificate will be issued

    Online procedure for registration

    • Login to the official VAT website and click on the registration tab
    • Fill in your relevant details and also attach scanned copies of essential documents
    • The corporation may be allotted with a temporary VAT registration number
    • After verification of your application and documents, a permanent VAT registration number will be assigned to your company

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