What is VAT? Introduced to replace the Sales Tax, VAT is a multi-point levy on each of the entities in the supply chain with the provision to allow ‘Input tax credit (ITC)’ on tax at an earlier stage, which can be appropriated against the VAT liability on subsequent sale.

Who is liable to register for VAT? Any trading or manufacturing business, whether a sole proprietorship or a partnership firm or a private limited company, that sells its products is liable to be registered for VAT

What is the procedure of VAT registration?

i. Submit an application for VAT in Form 1 along with the following documents to the local VAT office:

• Central Sales Tax registration certificate(Form A)• Professional tax registration certificate(Form 2)• Copy of important documents such as the address proof, ID proof of the Proprietor/Partner/Director• Four PP size photographs of the Proprietor/Partner/Director• PAN No. & Bank Account No of the Proprietor/Partner/Director• Copy of the rental agreement of the business place• Details of business activities• Partnership deed (in case of a partnership firm)• Memorandum of Association and Articles of Association (in case of a Private Limited company)

ii. The authorities from the local VAT office will inspect the premises of where you conduct business within a prescribed time

iii. Once the inspection is over, you will have to pay a specified fee to the local office for your VAT registration

iv. On payment of the fee, a TIN number will be allotted to you for your business and you will also be given the VAT registration Certificate.

This entry was posted on Friday, May 10th, 2013 at 5:16 am and is filed under Starting a Business.

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What is a TIN? Tax Information Network (TIN) is an initiative made by Income Tax Department of India to modernize the current system for collection, processing, monitoring and accounting of direct taxes using information technology. It is a repository of Tax related information from across the country. It is unique registration eleven digit number that is used for identification of dealers registered under VAT. Who should register for TIN? TIN number registration is required for Manufacturers, Traders, ,Exporters and Dealers. When new registration is undertaken under VAT or Central Sales Tax a new TIN will be allotted under registration number. The TIN number should appear on all Quotations/Orders/Invoices by both Sending Company and Receiving Company.  These are the documents that you will need to apply for a TIN number 1. ID Proof / Address proof / PAN card of proprietor with six photographs 2. Address proof of Business premises 

3. 1st Sale / Purchase Invoice, copy of LR/GR & payment/collection proof with bank statement 4. Surety/Security/Reference. This may differ slightly from State to State. After these documents are checked and scrutinized, a unique TIN number is provided to applicant. For applicants who have Central Sales Tax number, this can be changed to TIN number on request by the tax department. 

This entry was posted on Tuesday, September 17th, 2013 at 8:16 am and is filed under Money & Finance.

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How to Apply For a TAN

TAN stands for Tax Deduction and Collection Account Number. It is a 10-digit alpha numeric number issued by the Income Tax department in India.

Who should have a TAN?

All those persons/employers who deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN.

How to Apply for TAN? 

Offline:

1. Application forms can either be obtained from Tax Information Network Facilitation Center (TIN-FCs), PAN centres, any other vendors providing such forms or can be freely downloaded from this website.

2. TAN should be applied through Form No 49B  

3. The application form should be accompanied with photocopies of your ‘proof of identity’ and ‘proof of address’ and a fee of INR 62.

a. Demand draft/cheque shall be in favor of ‘NSDL – TIN’, payable at Mumbai.b. In case you are paying by cheque, deposit a local cheque (drawn on any bank) with any HDFC Bank branch across the country (except Dahej). Mention TANNSDL on the deposit slip.c. Mention your name on the reverse of the demand draft / cheque.

4. Submit the duly filled form with the necessary enclosures and demand draft/cheque at your nearest TIN-FC. These centres are established by NSDL (which is an appointed intermediary by the Government) across India. To find a TIN-FC near you, click Find TIN-FC 

Online: 

1. Apply for your TAN online. Click here – Apply for TAN

2. On confirmation, an acknowledgment screen will be displayed. Save and print this acknowledgment. The acknowledgment consists of the following.

• A unique 14-digit acknowledgment number• Status of applicant• Name of applicant• Contact details (address, e-mail and telephone number)• Payment details• Space for signature

3. Sign within the box provided in the acknowledgment. For applicants other than ‘Individuals’, the authorised signatory shall sign the acknowledgment and affix the appropriate seal or stamp.

4. Once you have applied online, documents showing your ‘proof of identity’ and ‘proof of address’ need to be sent over post/courier to NSDL – TAN Application division

Payment:

The fee for processing TAN application is INR 62 (INR 55 application charge + 12.36% Service Tax). Payment can be made by demand draft or cheque or credit card/debit card or net banking. Note the following important points:

1. Demand draft/cheque shall be in favor of ‘NSDL – TIN’, payable at Mumbai. 

2. In case you are paying by cheque, deposit a local cheque (drawn on any bank) with any HDFC Bank branch across the country (except Dahej). Mention TANNSDL on the deposit slip.

3. Mention your name and the acknowledgment number on the reverse of the demand draft / cheque.

4. On successful payment by credit card/debit card/net banking an acknowledgment will be displayed.

5. Send the acknowledgment duly signed, along with demand draft, if any, shall be sent to NSDL at

National Securities Depository Limited3rd floor, Sapphire Chambers,Near Baner Telephone Exchange,Baner,Pune – 411045

6. Super-scribe the envelope with ‘APPLICATION FOR TAN – Acknowledgment Number’ (e.g. ‘APPLICATION TAN – 88301020000244′).

7. Your acknowledgment and demand draft, if any, should reach NSDL within 15 days from the date of online application.Once NSDL receives your TAN application along with said documents, either through TIN FC or online, the details will be verified and then sent to Income Tax Department. Upon approval, the Income Tax Department will allocate a unique number and send you the confirmation and number through NSDL. 

This entry was posted on Monday, January 21st, 2013 at 12:18 pm and is filed under Starting a Business.

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What is Professional Tax? Professional Tax is a tax levied on professions and trades in India. It is a state-level tax and has to be compulsorily paid by every member of staff employed in private companies.

 

Applicability of Professional Tax as per the Constitution of India: Article 276 of the Constitution of India lays down that “there shall be levied and collected a tax on professions, trades, callings and employments, in accordance with the provisions of this Act. Every person engaged in any profession, trade, calling or employment and falling under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that entry 23 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.”

What is the Amount of Professional Tax? The maximum amount payable per annum towards professional tax is INR 2,500. The professional tax is usually a slab-amount based on the gross income of the professional. It is deducted from his income every month.

The slab for professional tax varies across the different states in India. Click here for the different slab rates.

In Which States is Professional Tax Applicable? The state governments of the following states have levied professional tax – Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh.

Who is responsible to deduct Professional Tax?

• The owner of a business is responsible to deduct professional tax from the salaries of his employees and pay the amount so collected to the appropriate government department.• He has to furnish a return to the tax department in the prescribed form within the specified time.• The return should include the proof of tax payment. In case the payment proof is not enclosed, the return shall be deemed incomplete and invalid

How To Register for Professional Tax?

• Apply for the Registration Certificate to your state’s tax department within 30 days of employing staff for your business• If you have more than one place of work, apply separately to each authority as regards the place of work coming under the jurisdictionof that authority

Penalties for Non-Compliance on Professional Tax Payment:

• Delays in obtaining Registration Certificate, a penalty of Rs. 5/- per day• In case of non/late payment of profession tax, penalty will be 10% of the amount of tax• In case of late filing of returns, a penalty of Rs. 300 per return will be imposed

This entry was posted on Tuesday, March 19th, 2013 at 7:42 am and is filed under Starting a Business. You can follow any responses to this entry through the RSS 2.0 feed.

On VAT / CST Registration:

1. You do not need VAT or CST to sell used stuff, as long as it isn't your business to do so.

2. You need VAT and CST to sell anywhere, ebay or offline.

3. The cost of VAT+CST registration for kerala, is as follows:Rs.500 for expected TO of over 5Lakhs and below

Rs.750 for expected TO of 5 to 10 LakhsRs.1000 + (Rs.25 per Lakh above 10Lakh) for expected TO of 10Lakh to 50LakhRs.2000 + (Rs.50 per Lakh above 50Lakh) for expected TO of 50Lakh and above.

In addition to the above fee, you also need to pay towards a safety deposit, which can be an FD, NSC or bank guarantee.

The amount for security deposit can be Rs.15000 or Rs.25000 depending on whether the business is a sole proprietary or partnership business vice versa.

4. VAT/CST requires a business premises, irrespective of whether the business is offline or online. This premise should be a one with its own house number. On application for the VAT/CST registration, their assessing authority will come to inspect the premises.

Additionally, I was advised that I need not apply for VAT\CST immediately. I was told however that it should be done within 6 months of beginning the business and/or before I reach 5Lakh TO. Also, should note that all transactions should be accounted, right from the very beginning, irrespective of whether you have a VAT/CST registration or not. Better hire an accountant to do the work .

Registration under Value Added Tax is governed by the respective State laws. Generally, the application for VAT & CST registration is online.

Documents Required:

1. Copy of PAN card of the company;

2. Certificate of Incorporation and Memorandum and Articles of Association;

3. Copy of PAN Card and Proof of place of residence of the directors; like electricity bill, telephone bill (two address proofs are

required)

4. Copy of PAN card and address proof of the signatory to the application

5. Two latest passport size photograph of the authorized signatory;

6. Proof of ownership/tenancy/lease of the premises of the place from where business is being carried out (Office).

7. Details of all places of business including branches and go downs in the state of Maharashtra (If any); Board resolution for

authorizing a person to sign documents and represent company for the purpose of VAT Registration;

8. A demand draft (DD) of Rs. 25,000/- and Rs. 5000/-

9. POA in favour of a person to file the documents and represent before the department for registration.

10. MICR code of the Bank Account of the company;

11. Copy of Cancelled Cheque;

12. Particulars of the other dealer who will provide the introduction for registration.

13. List of goods which are traded by the company

Documents required for Central Sales Tax Registration:

1. Two Photographs of the person signing the application;

2. Court fee stamp of Rs. 25/-

3. Memorandum and Articles of Association of the company;

4. List of item to be traded generally

5. List of items intended to be procured on Form C

6. BOD of director’s resolution to authorize a person to represent the company for the purpose of registration.

WHO HAS TO BE REGISTERED FOR VAT?

Any dealer conducting a business or intending to conduct a business may apply to be registered for VAT. However all persons conducting a business must register for VAT from the date they commence business if they believe their taxable turnover will exceed a threshold of Rs.40 lakhs in 12 consecutive calendar months.

All dealers must register for VAT if their taxable turnover exceeds Rs.10 lakhs for the preceding three consecutive calendar months.

Regardless of their taxable turnover the following dealers must register for VAT at the commencement of their business:

Every dealer importing goods in the course of business from outside the territory of India;

Every person residing outside the State but carrying on business within the State;

Every dealer registered or liable to be registered under the Central Sales Tax Act 1956, or any dealer making purchases or sales in the course of inter-state trade or commerce or dispatches any goods to a place outside the State otherwise than by way of sale;

Every dealer liable to pay tax at Special rates specified in Schedule VI of the AP VAT Act 2005;

Every commission agent, broker, del credere agent, auctioneer or any other mercantile agent by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of his non-resident principal;

Every person availing an industrial incentive in the form of a tax holiday or tax deferment;

Every dealer executing any works contract exceeding Rs 5 lakhs for the State Govt. or a local authority and any dealer executing works contracts and opting to pay tax by way of composition.

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CAN I APPLY FOR VOLUNTARY REGISTRATION?

Yes. However, your activities must constitute a business for VAT purposes and you will be required to meet the conditions laid down in the AP VAT Act 2005.  

WHEN DO I BECOME LIABLE TO REGISTER FOR VAT?

If you are in business in the categories listed in the Answer to the Question 1 above, you must register prior to the commencement of your business. For other businesses, if you are commencing a business and expect your taxable turnover to exceed, in 12 consecutive calendar months Rs.40 lakhs you must register for VAT at the commencement of the business.

If you intend to make inter-state purchases or sales or intend to dispatch goods outside the State other than by way of sale, then you must apply for VAT registration before applying for CST registration.

Other dealers have to consider their taxable turnover for the preceding 3 months and preceding 12 months. If during the past 3 months their taxable turnover exceeded Rs.10 lakhs, or exceeded Rs. 40 lakhs in the past 12 months, they must apply for VAT registration by the 15th of the following month.

Illustration: If your taxable sales exceeded Rs.10 lakhs during the preceding 3 months ending August 2005 say on 25.08.2005, your liability to be registered as VAT dealer arises at the end of August 2005.

The time to apply for VAT registration in this case is on or before 15.09.2005. You will be registered with effect from 01.10.2005.This is the date from which you are liable to charge and pay VAT. For the earlier period i.e., before 1.10.2005, you are liable for TOT.  

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HOW DO I CALCULATE MY TAXABLE TURNOVER?

Your taxable turnover is calculated on an ongoing basis. You should calculate at the end of each month the total value of taxable goods sold for the preceding three months. Where the total exceeds Rs.10 lakhs you are required to apply for VAT registration. You should also see whether your taxable turnover for the preceding twelve months exceeds Rs.40 lakhs. If it exceeds Rs.40 lakhs you are required to apply for VAT registration.

  

WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR VOLUNTARY VAT REGISTRATION?

In considering whether you should register voluntarily for VAT, you should ask yourself these questions:

a. Do I make taxable sales to other VAT dealers ?

If you are not registered for VAT you cannot issue tax invoices on which your customer VAT dealer can claim credit for the tax. Your customer will therefore have to charge a higher price for his sales if he cannot claim a credit for the VAT. In this case he might choose to trade with another VAT dealer and you would lose business.  

b. Do I trade, principally with non-VAT dealers/consumers ?

In this case it is likely to be in your interest not to register for VAT. 

c. What are the obligations of VAT registration ?

Once registered, you will have to account for output tax that is attributable to your taxable sales. You will also have to submit VAT returns monthly to the Commercial Taxes Department and keep proper books of accounts.If you decide to register voluntarily, the Law requires that you must remain registered for VAT for a period of 24 months regardless of your taxable turnover.  

d. Is my input tax credit likely to exceed the tax on the sales I make?

In this case you will benefit from VAT registration.  

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IF I WANT TO REGISTER VOLUNTARILY, CAN THE COMMERCIAL TAXES DEPARTMENT REFUSE TO REGISTER ME?

Voluntary registration can be refused for one or more of the following reasons when an applicant:

Has no taxable sales;

Has no fixed place of business;

Does not keep proper accounting records;

Has not provided details of a bank account with any bank;

Has arrears outstanding under APGST Act 1957 or CST Act 1956 or AP VAT Act 2005;

Is not able to establish his identity.

Where the Commercial Taxes Department refuses an application for voluntary registration, the applicant has the right to raise an objection and to pursue the issue to a formal appeal.  

WHEN I REGISTER FOR VAT CAN I CLAIM A CREDIT FOR VAT I HAVE PAID ON MY GOODS IN STOCK AT THE TIME OF REGISTRATION ?

Yes. However to obtain this credit you must comply with the following conditions:

The goods, including capital goods must be on hand on the date of effective registration notified on your VAT Certificate of Registration.

The goods must have been purchased within the three months preceding the date of effective registration.

The goods must have been purchased from a VAT dealer and you must have an invoice (not a tax invoice) from a VAT dealer with his TIN on the invoice.

You must take inventory within 7 days of the date of effective registration.

YOU CANNOT CLAIM A CREDIT FOR TOT OR CST INCURRED BEFORE VAT REGISTRATION.  

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HOW DO I REGISTER FOR VAT?

1 Click here to Download VAT 100

2 Fill up Form VAT 100: Important Guidelines

a Sl. No. 1 to 5: Self explanatory

b Sl. No. 6: Indicate major business activities – not exceeding 5

c Sl.No.7: Indicate major commodities to be traded – not exceeding 5

d Sl. No. 8 and 9: Self explanatory

e Sl. No. 10: Use Form VAT 100A for giving address of additional place of business if needed

f Sl. No.11: Use Form VAT 100B for giving details of owners, Partners, Directors if needed

g Sl. No. 12 to 13: Self explanatory

h Sl. No. 14: Indicate likely date of first sale transaction

i Sl. No. 15 to 23: Self explanatory

j Sl. No. 24: Indicate here any other information which is not covered up to Sl. No. 23.

3 Click here to download VAT Form 100A if needed

  a. Sl. No. 1 to 3: Self explanatory

4 Click here to download VAT Form 100B if needed

  a. Sl. No. 1 to 9 : Self Explanatory

5 Paste Photo at assigned places

6 Sign the applications

7 Enclose following Documents

a Evidence of ownership over business premises or

b Self attested copy of Rent/lease agreement (Registered) if property is taken on Rent/lease. In case of unregistered agreement, you can pay Document Registration Fee at CTO office also through Challan.

c Self attested copy of latest Electricity Bill of Business premises in support of Electricity connection to business premises.

d At least One Evidence of proof of residence of Sole Proprietor, Person responsible, Directors, Partners: Self attested.

e EPIC Card, Passport, Driving License, Bank Statement, Telephone Bill, Electricity Bill, Photo Identity Card issued by Government, Public Sector, Recognized Educational Institution, Public Ltd Company,

f Copy of Bye Laws of Company, Partnership Firm, Society, Trust if applicable,

g Bank Statement for proof of Bank Account Number

h Photo Copy of PAN card

  

HOW DO I REGISTER FOR CST?

For getting registered under CST ACT prior registration under VAT is mandatory. The dealers who are registered under VAT can apply for CST registration in form CST A (“Application for CST registration”), which is obtainable from your Tax Office. The form to apply for Registration CST A is also available on the wesite of the CTD. You must fill in this form and submit it to the Tax Office.  

WHEN DO I START TO CHARGE VAT?

You should start keeping VAT records and charging VAT to your customers from the date notified to you by the Commercial Taxes Department. This will be the date shown as the effective date of your registration on your Certificate of Registration. You will have to account for VAT from that date.

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When the movement of goods is from one State to another State, and if the buying dealer is a registered dealer, CST @ 2% against Form C shall be charged. Otherwise CST will be the local VAT rate, without C form.

Basic Concept of VAT VAT works on the principle that when raw material passes through various manufacturing stages and manufactured product passes through various distribution stages, tax should be levied on the ‘Value Added’ at each stage and not on the gross sales price. This ensures that same commodity does not get taxed again and again and there is no cascading effect. In simple terms, ‘value added’ means difference between selling price and purchase price. VAT avoids cascading effect of a tax. Basically, VAT is multi-point tax, with provision for granting set off (credit) of the tax paid at the earlier stage. Thus, tax burden is passed on when goods are sold. This process continues till goods are finally consumed. Hence, VAT is termed as ‘consumption type’ tax. VAT works on the principle of ‘tax credit system’

Generally, any tax is related to selling price of product. In modern production technology, raw material passes through various stages and processes till it reaches the ultimate stage. If a tax is based on selling price of a product, the tax burden goes on increasing as raw material and final product passes from one stage to other. For example, let us assume that tax on a product is 10% of selling price. Manufacturer ‘A’ supplies his output to ‘B’ at Rs. 100. Thus, ‘B’ gets the material at Rs. 110, inclusive of tax @ 10%. He carries out further processing and sells his output to ‘C’ at Rs. 150. While calculating his cost, ‘B’ has considered his purchase cost of materials as Rs. 110 and added Rs. 40 as his conversion charges. While selling product to C, B will charge tax again @ 10%. Thus C will get the item at Rs. 165 (150+10% tax). In fact, ‘value added’ by B is only Rs. 40 (150–110), tax on which would have been only Rs. 4, while the tax paid was Rs. 15. As stages of production and/or sales continue, each subsequent purchaser has to pay tax again and again on the material which has already suffered tax. Tax is also paid on tax. This is called cascading effect. 

Tax Identification Number: A system of audit checks will have to be established to keep check on bogus invoices. One essential requirement is to give TIN (Tax Identification Number) to all registered dealers, so that a check is maintained that (a) The tax as shown in the invoice has indeed been paid (b) There is no double credit on basis of same invoice. TIN will have to be indicated on each invoice issued. It will be a 11 digit numerical code. First two digits will indicate State Code [para 2.10 of White Paper on State-Level VAT) . Thus, State level computer network with check based on TIN will be established. Otherwise, misuse will be rampant. 

State wise documents requirement in india

SN

o

State Invoice

Copies

LST/CST

& Tin

Req.

TIN

Serie

s

Permit /

Waybill

Type

Entry Tax

Applicable

Octroi

Applicable

Transit

Pass

Required

Other Information

1 Delhi 3 YES 07 Not Required

NO NO

2 Gujarat 3 YES 24 Form 402 for outgoing & Form 403 for Incoming material

NO NO NO

3 Haryana 3 YES 06 Form 38 NO NO In case value of material is less thanRS. 25000/- permit not required

25 Punjab 3 YES 03 Not Required

YES YES NO Entry Tax for Incoming Goods. 12.5% - Cement, Ceramic Tiles, D.G.Sets, Lubricants, Marble & Plywood. 8.8% - Diesel. 4% - Iron Scrap, Pig Iron, M.S.Billet, Iron Wire, M.S.Ingot, Atta, Vanaspati / Refined Oil, Transformers, D.O.C/Rice Bran & Yarn. 2% - Furnance Oil. For Punjab State the Sales Tax Forms should be attached by downloading through website www.pextax.com.

26 Rajasthan 3 YES 08 VAT Form 47 for incoming & Form 49 for outgoing

NO NO NO

30 Uttar Pradesh

3 YES 09 Form 38 NO NO YES Present series of permit is F/AA. For more details regarding TP/Permit, please visit commercial tax dept. Website of U.P. state.

31 Uttarakhand

3 YES 05 Form 16A-VAT

NO NO Present series of permit is UK/VAT/D/2010. Almost every year the series get changed

32 West Bengal

3 YES 19 Form 50 YES NO YES Transit pass required for other states. Tax invoice copy is must for incoming material. There is a provisionof way bill downloaded from internet for the consignmentspertaining to West Bengal.

Note :

1. Three copy of original invoice is must for all States.2. Tin number is required for all states. Only U.PHimachalPradesh need not required Tin number3. For all states consignee party LST & CST number is most Essential4. Tin number is required for all states, only Himachal Pradesh need not required Tin number5. Last updated on 14-Mar-2011

Registration Procedure For Partnership Firms in India

Partnership firms in India are governed by the Indian Partnership Act, 1932. While it is not compulsory to register your partnership firm as there are no penalties for non-registration, it is advisable since the following rights are denied to an unregistered firm:

 

• A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act

• A right arising from a contract cannot be enforced in any Court by or on behalf of your firm against any third party

• Further, the firm or any of its partners cannot claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.

Registration Procedure: A partnership firm can be registered whether at the time of its formation or even subsequently. You need to file an application with the Registrar of Firms of the area in which your business is located.

• Application for partnership registration should include the following information:

- Name of your firm- Name of the place where business is carried on- Names of any other place where business is carried on- Date of partners joining the firm- Full name and permanent address of partners.- Duration of the firm

• Every partner needs to verify and sign the application

• Ensure that the following documents and prescribed fees are enclosed with the registration application :

- Application for Registration in the prescribed Form – I- Duly filled Specimen of Affidavit- Certified copy of the Partnership deed- Proof of ownership of the place of business or the rental/lease agreement thereof

It may be noted here that the name of your partnership firm should not “contain any words which may express or imply the approval or patronage of the government except where the government has given its written consent for the use of such words as part of the firm’s name”.

Once the Registrar of Firms is satisfied that the application procedure has been duly complied with, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.

This entry was posted on Tuesday, April 2nd, 2013 at 5:48 am and is filed under Starting a Business.

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How to Apply for Registration Certificate for Shops & Establishments

What is an Establishment?

Includes a shop, commercial establishment, residential hotel, restaurant, eating house, theater, or other place of public amusement or entertainment to which this Act applies and includes such other establishment as the State Government may, by notification in the Official Gazette, declare to be an establishment for the purposes of this Act. 

What is a Shop?

Shop means any premises:

• where goods are sold, either by retail, wholesale, or• Where services are rendered to customers.• It includes an office a store-room, godown, warehouse or work place, whether in the same premises or otherwise, used in connection with such trade/ business

A shop does not include a factory, a commercial establishment, residential hotel, restaurant, eating house, theater or other place of public amusement or entertainment; 

Registration of Shops & Establishments: As a business owner of a shop or establishment, you are compulsorily required to get the same registered under the Shops and Establishment Act. Here are the specific rules:

• Submit an application in the prescribed form to the Inspector of the area within 30 days of starting any work in your shop/establishment. The application is to be submitted along with the prescribed fees and should contain the following information:

o Your name as the employer and the name of a manager, if any;o The postal address of your establishment;o The name of your establishment;o Such other particulars as may be prescribed. 

• Upon receiving the application for registration and the fees, the Inspector shall verify the accuracy and correctness of the application. Once suitably satisfied, he shall enter the details in the Register of Establishments and issue a registration certificate of your establishment to you. This certificate will be valid for 5 years and has to be renewed thereafter.

• Remember, the registration certificate has to be prominently displayed at your establishment.

Communication of Change to the Inspector: In case of any change in respect of any information given during the application for registration, the same has to be notified to the Inspector’s office within 15 days after the change has taken place.  

Once again the Inspector will verify the correctness of the details furnished, make the related change in the Register of Establishments, amend the registration certificate or issue a fresh registration certificate, as he may deem fit.

Closing of Establishment to be Communicated to Inspector: In case you are planning to close down your establishment, within 15 days of closing the establishment, notify to the Inspector in writing the date of such closure and return the registration certificate. After due verification, the Inspector shall remove the name of your establishment from the Register of Establishments and cancel your registration certificate.

This entry was posted on Thursday, February 14th, 2013 at 11:56 am and is filed under Starting a Business.

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Central Sales Tax (CST) is a tax on Sale levied by Central Government under the provisions of Central Sales Tax Act, 1957. As per the provisions of this Act, any movement of goods from one State to another on account of :-

(a)  sale/purchase, or(b)  Transfer of document of Title to goods between two separate parties is considered as Interstate

sale/purchase.All such transactions are liable to CST.Any movement of goods otherwise than as sale (i.e. stock transfer to Branch, Depot, Consignment Agent or for Job work etc) , sent outside the state , is exempted from levy of CST.Any movement of goods, sent outside the country , is exempted from levy of CST. Example Exports, or Deemed Exports.Also some of the Interstate transactions are exempted if goods are supplied to Special Economic Zones or to UN or Diplomatic missions etc.The basic CST Rate as applicable to inter-state transactions is @2% but this basic rate or exemption from CST would apply if purchasing dealer issue the prescribed statutory forms to the selling dealer.Some of the points relating to CST rates are as follows:

         For an inter-state sale to a registered dealer against declaration Form (i.e. form C) , the rate of CST is 2% or local VAT rate whichever is lower.

         Under the local VAT law, if the sale or purchase is exempt or Nil, the rate of CST applicable in case of sale to unregistered dealer or registered dealers, will also be exempt or Nil.

         The Sales Tax rates applicable for sale of declared goods, w.e.f 1-4-2007 is as follows:

o    The sale of declared goods made to registered dealer, will attract levy of CST at local sales tax rate or 2%, whichever is lower.

o    The inter-state sale made to unregistered dealer, will be liable to CST at rates which is equal to VAT/sales tax rates as applicable within the State.

o    Declaration Forms for CST Transactions

During the course of Inter-state sale/purchase a Registered Dealer needs to issue/receive certain declarations to avail concessional rate of tax or exemption from tax, these declaration forms are C, E1, E2, F, H, I and J.

Sl.No. Form Purpose1 C To Avail concessional Rate of Tax @2%2 E1 Exemption from tax in case of CST sale in Transit (subsequent sale)3 E2 Exemption from tax in case of CST sale in Transit (Further subsequent sale)4 F Exemption from Tax in Stock Transfer to Branch, Depot, Consignment agent etc.5 H Exemption from tax in case of Deemed export sale6 I Exemption from tax in case of CST sale to SEZ Developer/SEZ Units7 J Exemption from tax in case of CST sale UN, Diplomatic Mission etc.

These forms are printed and supplied by the Registered Dealer’s respective Tax assessing authorities (generally the CST assessments are done by VAT assessing authorities). These forms are to be prepared in triplicate. All the Types of Statutory Forms and their usage is explained as below:-

Form CAll the registered dealers will issue 'Form C' at the time of purchasing goods from another registered dealer. The issue of 'Form C' by the purchasing dealer will ensure that the goods being purchased are covered under his registration certificate and the CST can be charged at lower rates by selling dealer. The selling dealer, on the basis of this 'Form C', charges CST @ 2% or lower rate as applicable and submits the same to his assessing authorities as a proof or cause for lower collection of CST.For example: Assume that the local sales tax rate is 4%. The sales made in the course of interstate trade, will attract levy of CST at the rates as applicable for local sales. But for any registered dealer on submission of declaration in 'Form C', the CST will be charged at 2% (4% or 2% whichever is lower). Otherwise dealer will be required to pay CST at local sales tax rates (@4%) if 'Form C' is not issued. The submission of Form C is mandatory and one Form can cover all transaction in each Quarter Separate Declaration of Form C required for each Quarter.   Submission of Form C on quarterly basis to the Commercial Tax Authority is mandatory.

Form E1Form E1 is used for making subsequent sales in the course of interstate sale/purchase by the first or original purchaser of goods. This Form should always be accompanied with 'Form C'. The Form E1 is used for first subsequent sales by transfer of document of title to goods.Form E1 is issued by the selling dealer to the dealer who is making subsequent sales for claiming the exemption from payment of CST to the subsequent buyer. The first subsequent seller of goods receives 'Form E1' and submits it to the department to claim exemption from CST for any sale made to other interstate registered dealer.

Form E2Form E2 is used for claiming the exemption from payment of CST. In case where the registered dealer purchases goods from one registered inter-state dealer and sells the same while in transit, to another registered inter-state dealer, the sales will be exempted from CST on submission of 'Form E2' to the department. The 'Form E2' is used to claim exemption from payment of CST to the seller who is a subsequent or last inter-state dealer of goods.

Form FForm F is used for claiming exemptions on the interstate movement of goods as Stock/Branch Transfer, transfer to consignment agent or goods sent outside the state for job work also. The 'Form F' is issued by the Branch or Agent who is receiving goods from another state to the Transferor of goods. The transferor of goods can claim exemption from CST on submitting the Form to the department.This 'Form F' is compulsory for claiming the transfer as Stock/Branch Transfer and no Tax/CST will be paid. In the absence of 'Form F', all such transfers will be treated as normal interstate sales and CST will be levied at the rate applicable. The Dealer has the option to submit one 'Form F' for all the interstate Stock/Branch Transfer for a month with supporting annexure if required.One Form F for one month is required while Form C can cover transactions for the quarter. The submission of Form F is mandatory . Separate Declaration in Form F required for each Month.   Submission of Form F on quarterly basis to the Commercial Tax Authority is mandatory.

Form HForm H is used by the seller for claiming the exemption on making penultimate sales (immediately preceding sale to exports). Sales made during the course of export are exempt from CST. The penultimate sale is also deemed to be in course of export and is exempt from CST. The dealer exporting goods will have supporting documents like customs documents, bank certificate, airway bill/bill of lading, shipping bill etc. However, the penultimate seller will not have any direct evidence to prove that the sale made is exempt from tax. In such cases, the actual exporter has to issue a certificate to the penultimate seller in form H.Provisions applicable to Form C are applicable to Form H also.

Form IForm I is used for claiming the exemption from CST on the sales made to any Special Economic Zone (SEZ). The buying dealer issues 'Form I' to the selling dealer. The selling dealer needs to submit the same (Form I) to the department to claim all the export benefits available to original exporter in SEZ area.Provisions applicable to Form C are applicable to Form I also.

Form JForm J is used for claiming the exemption of CST in case of Interstate sales made to any United Nations, Diplomatic Missions etc. The Form is issued by purchasing dealer to the selling dealer. The selling dealer submits this Form to the department to claim the exemption.

Registered Dealer means the dealer who is in the position to give C or D form.

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CST Sales  without  C Form Local Tax will be applicable for example local tax rate is 4 % then you have to collect CST  @ 4% pay to department & if local tax rate is 12.5% then you have to collect CST @ 12.5% pay to department W.E.F.1.4.2007. for futher details please see our APVAT manual book (page no.913)

if interstate sales from Maharshtra is made without a C form , there will be a differential tax liability depending on the goods sold under the relevant schedule under MVAT Act 2002 . For eg . if a CST sale is made of an item which is covered under Sch. C (4%) and if the C form is not recieved from the purchaser , then the additional tax liability would be 4%-2% . i.e. 2 % . The same applies for 12.5% items as well .

There is no particular impact in VAT In Maharashtra but Rate of tax deduction at source has been increased from 4% to 5% on works contracts executed by dealers not registered under the Maharashtra Value Added Tax Act, 2002.

Please can any body tell me that whether if we purchase any engineering items from the parties of  other states do we provide Waybills from our side.  Or the party has to enclose waybills from his side.  One of my friend's company providing CST waybills to the other party for procuring the engineering items from them.

You have to provide the way bill to the party (Consigner)  from your end also, party will only give the waybill from which state they belongs.

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what is the procedure for issue of 'c' form in sale u/s 6(2)? Dear Sir,  Manufacturer- Neelachal (orissa) Buyer- MMTC(West Bengal) consignee - cipl (west bengal) CIPL makes the payment for the goods to MMTC for who gives the DO to lift the material from NEELACHAL. CIPL issues the waybill in the name of NEELACHAL, and neelachal rasies excise inovices accordingly by buyer as mmtc & consignee as cipl. Later mmtc raises commercial invoice u/s 6(2) to cipl. Now we need to issue 'c' form. how can we issue the 'c' form and to whom do we have to issue and what is the procedure of doing it? we are generating waybill online & mmtc is holding secuirty deposit against 'c' form. Please advice

You should issue Form C to MMTC and to be received Form E1 from MMTC. as per U/s 6(2) this type of Sales in Transit. without Form E1, purchase will be attract as without waybill purchase from MMTC and Tax will be pay on Purchase Value extra.

What is the procedure for issue of C Form ONLINE Please help. Thanks Bhupendra Udaipur(Rajasthan)

In karnataka process for procurement of C form is as below 1) Make the request in xml format with required details. 2) Upload the same into department website. 3) After upload it will be approved by local vat officer having jurisidiction 4) Take print out of the c form 5) Get it stamped from department. 6) After this you can sign and send it to sellers.

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Facts :  Dealer is registered in Maharashtra (Mumbai) has placed order at Vapi (Guj), want to transfer the same goods to other dealer registered at Gujrat (Baroda) can sale the goods in transit u/s 6 (2) of CST act. i.e. without any tax ?? Here Vapi dealer sales @ 2% CST to Mumbai dealer & Mumbai dealer Sales in transit to Baroda dealer u/s 6 (2) ? Vapi dealer issue E-1 form to Mumbai dealer, Mumbai dealer issue C Forms to Vapi dealer & collect "C" forms from Baroda dealer (He is end consumer) will it be O.K ?             Goods is being directly send by Vapi to Baroda (In L.R. Copy consignee name -Baroda Party & Consigner name Vapi party (on a/c of Bombay party) will it be o.k. ?            Expl. 2 to s-3 (2) which give reference to movement complete in same state, will be attracted here ?          I feel that condition is only Occasion of goods movement for Inter-state sale (the movement goods is being handed over to carrier) for interestate sale and further sales of the same goods during their movement for interstate sale  for the benifit of S-6 (2).          Please guide & correct documets position to be maintained by mumbai dealer.       

In my view since goods are not moved outside of Gujarat, Dept. may reject the same.