About Taxable & Taxfree Items

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Murtaza I Bhagat (Querist)

13 October 2009 Dear Sir/s,

Kindly Help me about If I am doing a business of TAX free Items Just Like (Rechare Coupon,Cloth,Kite) with these I also doing other Business related to these like (Mobile,Readymade Garments,Fire Crackers)
My Que is If I doing Turnover of 3 Lacs with Tax Free Items & 2 Lacs of Taxabel Items as above.
Do I have to Register Under VAT or Not ?

Pls reply me

Thanks in Advance

Murtaza I Bhagat

Murtaza I Bhagat (Querist)

20 November 2009 Dear Sir/s,

Kindly Help me about If I am doing a business of TAX free Items Just Like (Rechare Coupon,Cloth,Kite) with these I also doing other Business related to these like (Mobile,Readymade Garments,Fire Crackers)
My Que is If I doing Turnover of 3 Lacs with Tax Free Items & 2 Lacs of Taxabel Items as above.
Do I have to Register Under VAT or Not ?

Pls reply me

Thanks in Advance

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

14 July 2024 Based on the information provided, here’s the guidance regarding VAT registration for your business:

In most states in India, VAT registration is mandatory if your turnover exceeds the threshold limit specified by the respective state VAT laws. However, the threshold limit can vary from state to state. Here are the key points to consider:

1. **Tax-Free Items**: Items like recharge coupons, cloth, and kites are considered tax-free items if they fall under the exempted or zero-rated category according to the state VAT laws. This means that VAT is not applicable on these items when sold.

2. **Taxable Items**: Items like mobile phones, readymade garments, and firecrackers are taxable items, and VAT is applicable on the sales of these items.

3. **Combined Turnover**: You mentioned a turnover of ₹3 lakhs from tax-free items and ₹2 lakhs from taxable items. In many states, the turnover from both tax-free and taxable items is considered for the purpose of VAT registration.

4. **Threshold Limit**: Each state specifies a threshold limit of turnover beyond which VAT registration becomes mandatory. This threshold limit can range from ₹5 lakhs to ₹20 lakhs annually, depending on the state.

5. **Registration Requirement**: If your total turnover (including both tax-free and taxable items) exceeds the threshold limit specified by your state’s VAT laws, you are required to register for VAT.

6. **Benefits of Registration**: Registering for VAT allows you to collect tax from customers on taxable items, claim input tax credit on purchases, and comply with legal requirements.

To determine whether you need to register under VAT, you should check the specific VAT laws of your state or union territory. You can find this information on the official website of your state’s commercial tax department or contact them directly for clarification.

If your turnover exceeds the threshold limit, you should proceed with VAT registration to ensure compliance with the law and to avail the benefits of input tax credit.

It’s advisable to consult with a local chartered accountant or tax advisor who can provide guidance specific to your state and help you with the VAT registration process if required.

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