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Business from home with vat?

Amit (NO) (26 Points)

11 June 2015

Hello Friends,

I am very new to business and want to know few things.

1. I want to start business from home and want to buy and sell things online. do I need VAT No.?

2. I dont need space for business, I can operate business from home with PC, so If I register (for VAT) business address of my home, does My home will become commercial premises? If so, all home taxes, light become commercial?

I am really confused what to do, pl. guide.

Thanks,

Amit Jain

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4 Replies

Harshal (CA) (106 Points)
Replied 12 June 2015

Hi Amit,

There are two ways you can do online business.

1. You actually buy goods & then sell them to customers. In this case you have to obtain VAT number.

2. You act as an mediator. You just bring seller & buyer on the same floor. Seller sales the goods directly to buyer & you receive commission (either from both or one). In such a case you might not need to take VAT registration as you are just providing an service. (it also depend upon state in which you are operating. In Maharashtra you don't need to take VAT number).

Regarding your second query, I am not so sure but in my opinion your home will still be home & you need to pay all charges as per residential rates only & not commercial rates. But please confirm the same with a subject matter expert.

CA Raj Doshi (Practising CA) (8723 Points)
Replied 13 June 2015

2. Home shall remain home. Light bill will as per residential.

Amit (NO) (26 Points)
Replied 14 June 2015

Hello Friends,

Let me explain senario of my situation.

I am from gujarat, planning to import goods from china or other country and want to sell in India with available existing online stores like f.kart or am.zon.

while checking for sell goods on these sites. they ask for VAT compulsory. can not sell anything without VAT.

many ppl. says that VAT not required for turnover limit up to 500000 or so. I am sure that I can not generate that much turnover in a year.

what to do ?

so If i go for VAT, I will have to enter unncecessry expense loop given below.

1. I have to go for rent office. because corporation will not allow commercial activity from home. they will start commercial tax on my residence. ok then electricity will start commercial unit charges.

2. register for VAT expense around 5000 or so.

3. evey month compulsory file for VAT

so before getting anything, start paying money to authority.

what to do ?

Amit (NO) (26 Points)
Replied 16 June 2015

Registration under Act: When Compulsory?

VAT (Value Added Tax) registration is compulsory for dealers having turnover exceeding Rs 5 lacs (or increased limit of Rs 10 lacs in some states).On registration, such dealer is allotted a unique 11 digit TIN (Taxpayer’s Identification Number).

CST (Central Sales Tax) registration is not dependent on amount of turnover. Simply put, registration of dealer becomes compulsory once he affects an inter-state sale.

Ref:. : h++p://yourstory.com/2012/09/service-tax-vat-or-cst-an-overview-taxation-basics-for-startups/