Who has to register under VAT and CST ?

VAT (Value Added Tax) is a multipoint tax levied on every sale of goods in the State by a dealer. VAT is collected by the dealer and the same is remitted to the Government. So, those entities who sell goods in the State of Karnataka have to register with Commercial Tax department of Karnataka.

Is VAT registration compulsory?

Registration will be compulsory for dealers having a turnover (sale of goods) that exceeds the threshold decided by each state of India. In Karnataka, if the taxable turnover of a dealer is likely to exceed Rupees Ten Lakh during aFINANCIAL year or if the taxable turnover exceeds eighty three thousand in any one month, then such a dealer has to get himself registered.

Is separate registration to be done for CST?

The application for VAT registration has to be done online through Karnataka Commercial Taxes Department portal. It is a combined application for registration under the provisions of the Central Sales Tax Act (CST); Karnataka Tax on Entry of Goods Act (KTEG). Once the registration process is accepted, Tax Identification Number (TIN) is allotted by the department. This is a common number to be used for Karnataka VAT as well as CST transactions.

Is a place of business compulsory at the time of registration?

It may so happen that the budding entrepreneur starts the business from his residence till he identifies the place for business. So, during this period, can he obtain VAT registration? The answer is No. The VAT registration seeks the details of place of business and the registration process involves inspection of premises by VAT Officer. Hence, the place of business is compulsory to obtain VAT registration.

Can a proprietor (single owner) have two VAT registrations?

Suppose a proprietor runs two businesses, say, auto parts shop as well as a hardware shop, can he get two registrations? The answer is No. One proprietor (individual) can get one VAT registration. Under such registration, he can add additional business or additional place of business as branch. Or else, he has to start another firm (partnership firm or a company) and obtain separate registration.

Once VAT registration is done, should any returns be filed with the commercial tax department?

Irrespective of doing business or not, once VAT registration is done, the dealer is obliged to file monthly VAT returns (online) through departmental portal. Non filing of VAT returns (even a NIL return) attracts penal provisions

Is any deposit payable at the time of registration?

Yes. The Commercial Tax department demands a security deposit which may vary from Rs.3000 to Rs.15000 depending upon the type and nature of business

Should one intimate the change in place of business?

Yes. One has to intimate the department within 30 days about any change that takes place after the registration. The change of partners or directors, change in place or nature of business, etc., is to be informed and the registration certificate amended accordingly.

Finally, if we decide to register under K VAT, how much time is required for registration?

In our experience, VAT registration will take around 15 – 20 working days in Karnataka. Mostly the time is taken for inspection of the premises.