URD Purchases
This query is : Resolved
19 February 2010
Iron ore Purchases from Un registered Dealer
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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