Vat audit

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ravi gulgule (Querist)
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25 January 2012 we are service provider company. we invoice service charges to our associate companies based out of india. please let us know applicability of VAT audit to us as our revenue from these sources is around Rs 3 crores.

CA. Hari Kishan

CA. Hari Kishan (Expert)
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28 January 2012 Mr.Ravi

Should the company be purely into provision of service to companies based outside India, the question of VAT audit shall not arise as the same shall not fall under the definition of taxable turnover. More so registration under VAT is also not required.

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ravi gulgule

ravi gulgule (Querist)
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28 January 2012 thanks for the response. i just want to add that besides predominant services income. we had about Rs 21 lakh export trading income as well. thus can you calrify:
1 VAT applicability for export transctions
2 are all sevices expempt from VAT?
grateful for your efforts.

CA. Hari Kishan

CA. Hari Kishan (Expert)
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28 January 2012 Mr.Ravi

To respond to your query, should the transcation be for pure services, it shall be exempt from VAT tax as there is no goods in it.

However should there be a composition of both goods and services, there shall be works contract tax.

Presently under the Karnataka Value Added Tax, the VAT audit limit is on TOTAL TURNOVER of Rs. 1 crore. Total turnover shall include export trading also.

Since you have mentioned that predominently the income is from pure services and only Rs. 21 laksh is received from trading exports. Then the question of VAT audit shall not apply. The definition of turnover does not cover service income. Hope the same is clarified.

Please note my reply is based on Karnataka Value Added Tax Act, 2003.

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