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The Value Added Tax (VAT) has been one of the significant and influential components of the post-liberalization tax reforms. This is a form of Consumption Tax, which takes into account indirectly and comprehensively all multiple sales taxes associated with a product/good/service, at every stage of its transaction in the supply chain. The seller charges value added tax to the buyer of its product or service, and pays to the government. VAT serves to avoid the tax evasions and the cascade effect of multiple sales taxes, by taxing only the Value Addition at all stages existing under the supply chain of a product/good/service. It is the main reason that the system of value added tax is gaining grounds and popularity over the traditional sales taxes, in countries of all across the world. The ‘Value Added’ to a product by any of the business entities in the supply chain, is difference between the sale price charged to its consumer and the total cost of all input materials together with input taxes.
The methods and rates of VAT collections vary from country to country; most prominent ones are the Subtraction method, Addition method, and the Tax Credit method. In India, the Tax Credit method for vat assessment and collection is followed, which is quite similar to its Central Value Added Tax (CENVAT); while the basic rates of Indian VAT are --- 4% and 12.5%, commonly applied to general products and services. VAT is basically related to the jurisdiction of State or Province. The State or Provincial Governments through their Taxation Departments perform levying and collection of VAT within their respective jurisdictions, and the Central or Federal Government facilitates their proper implementation of VAT.
Our service organization for extensive and gratifying diverse services to the people and organizations of all sectors of commerce and economy, in countries of all around the world, provides comprehensive and exclusive services for proper vat registration, including the online vat registration.
When To Register VAT
The foregoing description answers to the question, what is vat registration? Now, the new questions arise as to who are required to register VAT, and when to register for VAT? Answers to these are given below.
The vat registration is necessary for every individual, entrepreneur, business enterprise, company, or corporation, and organization, involved in the business of selling or purchasing, or transacting goods, products, or services in any way, in any sector. The most suitable period of time for the vat registration is prior to commencement of such commercial activities in the specified field of commerce. Because, every registered company or dealer, trader of manufacturer, which has a turnover of sales above an amount specified, essentially and lawfully requires to issue tax invoices used for the sale of its products and services. In India, The Tax Payer’s Identification Number (TIN) is used for identification or registration of companies or dealers under VAT. Similarly, a Value Added Tax Identification Number or VAT Identification Number (VATIN) is used in other countries of the world, including the nations of the European Union, for VAT collection objectives.
VAT Registration Procedure
For vat registration with the concerned State or Federal level VAT Office, submit the following application form and documents, along with the prescribed vat registration fees applicable. After due verification of these, the TIN will be issued to the applicant, together with a certificate for company vat registration.
The vat registration requirements vary depending upon the type of business firms, like proprietary company, limited liability partnership, private limited company, public limited company, etc. Again, these vat registration requirements and procedures are different in different countries.
The fundamental requirements for company vat registration for all these business establishments are:
- Neat filing in up the VAT Application Form
- Central Sales Tax (CST) Registration Certificate
- Professional Tax Registration
- PAN and Bank Account Number of the Main Business Owner
- Details of Business Activities
- Copy of the Rental Agreement of the Business Place
- Copy of the Address Proof, and Personal ID of the Proprietor, Director, or Partner, along with Four PP size Photographs
For the Partnership Firms, an additional enclosure of the ‘Partnership Deed’ is to be furnished. And for the Private Limited Companies, the Articles of Association (AOA) and the Memorandum of Association (MOA) are to be submitted, for the purpose of vat registration with the concerned VAT Office.