Karnataka Value Added Tax (VAT) is a levy of tax on the purchase or sale of goods in the State of Karnataka. So, those dealers who are buying or selling goods have to get registered under the provisions of K VAT Act.
Whether every dealer has to get registered?
- The Act exempts small dealers who are having taxable sales of less than Rs.7,50,000/- per year or Rs.62,000/- per month. However, if the dealer purchases taxable goods from outside Karnataka (say, from Chennai) or made any sales to outside Karnataka (say, Hyderabad) he has to get registered irrespective of the taxable turnover.
- Secondly, certain types of goods are exempt from the levy of VAT. For example, all agricultural seeds (other than oil seeds), aids and implements used by handicapped persons, bread and bun, betel leaves, etc. The exhaustive list of items which are exempt from VAT is given in First Schedule of K VAT Act. So, dealers of these goods are exempt from VAT Registration.
The registration provision can be better explained through Frequently Asked Questions (FAQ)
Q1: M/s. Srirama Printers are the dealers in printed books and their annual turnover has crossed Rs. 10 lakh during this financial year. Should he get registered under KVAT?
No. The dealers in books, Periodicals and journals are exempt from the levy of VAT as per Entry 11 of First schedule of Karnataka VAT Act.
Q2: M/s Start Up (just started the business, not having any turnover) wants to purchase taxable goods from Chennai without VAT registration in Karnataka? Can he do so?
No. Even though it is a new company, they won’t get any exemption from registration under VAT, if they have to purchase any taxable goods from outside the State of Karnataka. Any transaction (either purchase or sale) of taxable goods takes place between the states is called as Inter-State Transaction. For all Interstate transaction, irrespective of the value, the dealer has to get VAT registration.
Q3: If a Service Provider (means not selling goods) purchases a capital asset, say machinery and the said machinery is used to provide the service, is he liable for VAT registration?
Legally not required but practically, taking voluntary registration may help in movement of goods, especially when the goods have to cross check posts!
Q4: What happens if a dealer fails to register for KVAT by ignorance or otherwise?
Penalty for non-registration will be Rs.2, 000/- and he will have to pay all the taxes due from the applicable date along with hefty interest & penalty.
Q5: How get KVAT registration?
Not easy! An application form (VAT form 1) to be filled and filed online. Apart from the application scanned copy of certain documents such as address proof, identity proof, entity proof, etc to be submitted online. Not just that, hard/physical copy of all the documents submitted online and the requisite fee to be filed with the concerned Jurisdictional VAT Office.
On verification of the documents and after the physical inspection of the premises by the VAT Officer, the dealer will get Registration Certificate.