VAT applicability
This query is : Resolved
28 September 2009
Hi,
One of my clients is the wholesaler of silver coins.They follow the following process.
· Buy Raw silver
· Manufacture silver coins
· Get special box prepared with special effect of printing
Cost of Special box is more than the value of silver coin.
If they sell only silver coin they will self for 200 Rs but they sell with box they sell for 450 Rs. When they sell the silver coin with box should they charge VAT @1%?
Hi,
One of my clients is the wholesaler of silver coins.They follow the following process.
· Buy Raw silver
· Manufacture silver coins
· Get special box prepared with special effect of printing
Cost of Special box is more than the value of silver coin.
If they sell only silver coin they will self for 200 Rs but they sell with box they sell for 450 Rs. When they sell the silver coin with box should they charge VAT @1%?
Ram Avtar Singh
(Expert)
28 September 2009
yes
29 September 2009
While selling should he sell based on per gram or per piece to attract 1% VAT.
EXAMPLE WHEN HE SELL NORMAL COIN RATE WOULD BE 20 Rs per gram and when he sell with BOX rate would be 45 Rs per gram?
EXAMPLE WHEN HE SELL NORMAL COIN RATE WOULD BE 20 Rs per gram and when he sell with BOX rate would be 45 Rs per gram?
02 August 2025
In your client’s case (wholesaler of silver coins with special boxes), here’s how VAT applicability generally works:
* **Silver coins** are often **taxed at 1% VAT** as per many state VAT laws (especially in Maharashtra and some others).
* The **special box**, being a packaging material with a value higher than the coin, may be treated separately.
* If the silver coin and the special box are **sold together as a single composite product**, then the VAT rate applicable on the **dominant item** (silver coin) generally applies — so likely **1% VAT** on the total price.
* However, if the box is considered a **separate item** (like a luxury packaging), it may attract a **different VAT rate** (often higher, like 12.5% or 5% depending on the state).
* Since the cost of the box is higher than the coin, tax authorities may scrutinize the valuation.
* The safest approach: **Invoice should show the value breakup** (coin vs box). Apply 1% VAT on coin value and applicable VAT on box value.
* If sold as a single item without breakup, then the **dominant item rate (1%)** generally applies.
**Summary:**
| Scenario | VAT Rate Applied |
| ------------------------------------- | ---------------------------------- |
| Silver coin alone | 1% VAT |
| Silver coin + special box (composite) | 1% VAT on total (usually) |
| Silver coin + box (separate pricing) | 1% on coin, VAT on box as per rate |
---
**Note:** Check your specific state’s VAT rules (Maharashtra, Gujarat, etc.) for any notifications on silver coins.
If you want, I can help you draft a tax-compliant invoice or find specific notifications for your state!
* **Silver coins** are often **taxed at 1% VAT** as per many state VAT laws (especially in Maharashtra and some others).
* The **special box**, being a packaging material with a value higher than the coin, may be treated separately.
* If the silver coin and the special box are **sold together as a single composite product**, then the VAT rate applicable on the **dominant item** (silver coin) generally applies — so likely **1% VAT** on the total price.
* However, if the box is considered a **separate item** (like a luxury packaging), it may attract a **different VAT rate** (often higher, like 12.5% or 5% depending on the state).
* Since the cost of the box is higher than the coin, tax authorities may scrutinize the valuation.
* The safest approach: **Invoice should show the value breakup** (coin vs box). Apply 1% VAT on coin value and applicable VAT on box value.
* If sold as a single item without breakup, then the **dominant item rate (1%)** generally applies.
**Summary:**
| Scenario | VAT Rate Applied |
| ------------------------------------- | ---------------------------------- |
| Silver coin alone | 1% VAT |
| Silver coin + special box (composite) | 1% VAT on total (usually) |
| Silver coin + box (separate pricing) | 1% on coin, VAT on box as per rate |
---
**Note:** Check your specific state’s VAT rules (Maharashtra, Gujarat, etc.) for any notifications on silver coins.
If you want, I can help you draft a tax-compliant invoice or find specific notifications for your state!
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