URD Purchases
This query is : Resolved
vijay bhaskar
(Querist)
19 February 2010
Iron ore Purchases from Un registered Dealer
CMA Ramesh Krishnan
(Expert)
19 February 2010
Your query is not clear
02 August 2025
When you purchase **iron ore from an unregistered dealer (URD)**, here’s what you generally need to know under VAT laws (like UP VAT or KVAT):
---
### Key Points for URD Purchases of Iron Ore:
1. **No Tax Invoice from URD:**
* Since the seller is unregistered, you will only get a **“kaccha bill”** (bill without tax invoice).
2. **VAT Liability on URD Purchase:**
* You, as the buyer, may have to pay VAT on such purchases under the **“reverse charge mechanism”** or **URD purchase rules**.
* This is because the unregistered dealer does not collect VAT.
3. **Input Tax Credit:**
* You can usually **claim input credit** on the VAT paid on URD purchases.
* This credit can be adjusted against VAT you charge on your sales.
4. **Reporting in VAT Return:**
* URD purchases need to be declared separately in your VAT return.
* Show taxable turnover and VAT paid on such purchases as per the prescribed format (e.g., in KVAT 100 or UP VAT return).
---
### What to do practically:
* Calculate VAT on the purchase amount at the applicable rate (which may be 5% or as per the state VAT schedule for iron ore).
* Pay this VAT directly to the state government (if applicable).
* Keep records of purchase bills and VAT payment proof.
* Declare the URD purchase value and VAT paid in your VAT return under the relevant sections.
* Claim input credit as per rules.
---
### Important:
VAT rules can vary slightly by state, so **please confirm the specific rules for the state you operate in** (UP, Karnataka, etc.).
---
If you want, I can help you draft an example entry or explain the calculation based on the latest rates. Would that help?
---
### Key Points for URD Purchases of Iron Ore:
1. **No Tax Invoice from URD:**
* Since the seller is unregistered, you will only get a **“kaccha bill”** (bill without tax invoice).
2. **VAT Liability on URD Purchase:**
* You, as the buyer, may have to pay VAT on such purchases under the **“reverse charge mechanism”** or **URD purchase rules**.
* This is because the unregistered dealer does not collect VAT.
3. **Input Tax Credit:**
* You can usually **claim input credit** on the VAT paid on URD purchases.
* This credit can be adjusted against VAT you charge on your sales.
4. **Reporting in VAT Return:**
* URD purchases need to be declared separately in your VAT return.
* Show taxable turnover and VAT paid on such purchases as per the prescribed format (e.g., in KVAT 100 or UP VAT return).
---
### What to do practically:
* Calculate VAT on the purchase amount at the applicable rate (which may be 5% or as per the state VAT schedule for iron ore).
* Pay this VAT directly to the state government (if applicable).
* Keep records of purchase bills and VAT payment proof.
* Declare the URD purchase value and VAT paid in your VAT return under the relevant sections.
* Claim input credit as per rules.
---
### Important:
VAT rules can vary slightly by state, so **please confirm the specific rules for the state you operate in** (UP, Karnataka, etc.).
---
If you want, I can help you draft an example entry or explain the calculation based on the latest rates. Would that help?
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