VAT ON SALES
This query is : Resolved
08 May 2009
IF A CLIENT/ DEALER HE IS DEALING IN THE MANUFACTURING OF SIGN BOARDS AND IS A REGISTERED DEALER. I JUST WANTED TO KNOW WHAT PERCENTAGE OF VAT HE SHOULD APPLY (4 % OR 12.5 %) WHEN HE MANUFACTURERS & SELLS THIS GOODS.
NATURE OF BUSINESS ON THE CERTIFICATE OF REGISTRATION ARE AS FOLLOWS:- RESELLER, MANUFACTURER, RETAILER, WORKS CONTRACTOR.
OUT OF WHICH HE ONLY TAKES ORDERS OF MANUFACTURING & SELLS IT TO THAT PARTICULAR CLIENT.
PLEASE ANSWER ASAP.
THANKS & REGARDS
NATURE OF BUSINESS ON THE CERTIFICATE OF REGISTRATION ARE AS FOLLOWS:- RESELLER, MANUFACTURER, RETAILER, WORKS CONTRACTOR.
OUT OF WHICH HE ONLY TAKES ORDERS OF MANUFACTURING & SELLS IT TO THAT PARTICULAR CLIENT.
PLEASE ANSWER ASAP.
THANKS & REGARDS
08 May 2009
VAT
09 May 2009
4%
09 May 2009
Thanks Vivek Gupta
BUT PLEASE CAN U TELL ME HOW & EXPLAIN IT IN DETAIL.
BUT PLEASE CAN U TELL ME HOW & EXPLAIN IT IN DETAIL.
10 May 2009
Dear James,
Can You tell me the name of related state, as on sign the rate of tax may vary from state to state.In Madhya Pradesh the rate is 12.5%.
Can You tell me the name of related state, as on sign the rate of tax may vary from state to state.In Madhya Pradesh the rate is 12.5%.
10 May 2009
Hi Sunil,
This pertains to the State of Maharashtra, City - Pune.
This pertains to the State of Maharashtra, City - Pune.
02 August 2025
For **VAT on manufacturing and sale of sign boards in Maharashtra (Pune)**, here’s a detailed explanation:
---
### VAT Rate on Sign Boards in Maharashtra
* **Sign boards generally fall under the category of "works contract" or "manufactured goods"**, depending on how the work is performed and the nature of goods supplied.
* **VAT rate for manufactured goods in Maharashtra** is normally **12.5%** unless specifically exempted or taxed at a lower rate.
* However, **works contract related to advertising materials and sign boards** are often taxed at a **compounded rate of 4%** under Maharashtra VAT, subject to certain conditions.
---
### What applies to your client?
* Since your client is **manufacturing sign boards on order and selling the finished goods**, this is a **works contract activity** rather than a simple sale of goods.
* In Maharashtra, **works contracts related to advertising or signage are taxed at 4%**, which includes tax on material and labor combined.
* If your client is just reselling sign boards (not manufacturing or performing works contract), then the **normal VAT rate of 12.5%** on goods sold would apply.
---
### Summary:
| Scenario | Applicable VAT Rate (Maharashtra) |
| -------------------------------------------- | --------------------------------- |
| Manufacturing + works contract (sign boards) | 4% (compounded rate) |
| Resale of sign boards (no manufacturing) | 12.5% (standard VAT on goods) |
---
### Important Notes:
* Your client must **issue a VAT invoice showing the tax rate** applied.
* If registered as a **works contractor**, the 4% rate applies on the contract value (including materials).
* If just a reseller, then VAT at 12.5% applies on the sale price.
---
**So in your case, since your client manufactures and sells sign boards on order, the VAT rate applicable should be 4%.**
If you want, I can help you with the relevant Maharashtra VAT notification or circular references. Would that help?
---
### VAT Rate on Sign Boards in Maharashtra
* **Sign boards generally fall under the category of "works contract" or "manufactured goods"**, depending on how the work is performed and the nature of goods supplied.
* **VAT rate for manufactured goods in Maharashtra** is normally **12.5%** unless specifically exempted or taxed at a lower rate.
* However, **works contract related to advertising materials and sign boards** are often taxed at a **compounded rate of 4%** under Maharashtra VAT, subject to certain conditions.
---
### What applies to your client?
* Since your client is **manufacturing sign boards on order and selling the finished goods**, this is a **works contract activity** rather than a simple sale of goods.
* In Maharashtra, **works contracts related to advertising or signage are taxed at 4%**, which includes tax on material and labor combined.
* If your client is just reselling sign boards (not manufacturing or performing works contract), then the **normal VAT rate of 12.5%** on goods sold would apply.
---
### Summary:
| Scenario | Applicable VAT Rate (Maharashtra) |
| -------------------------------------------- | --------------------------------- |
| Manufacturing + works contract (sign boards) | 4% (compounded rate) |
| Resale of sign boards (no manufacturing) | 12.5% (standard VAT on goods) |
---
### Important Notes:
* Your client must **issue a VAT invoice showing the tax rate** applied.
* If registered as a **works contractor**, the 4% rate applies on the contract value (including materials).
* If just a reseller, then VAT at 12.5% applies on the sale price.
---
**So in your case, since your client manufactures and sells sign boards on order, the VAT rate applicable should be 4%.**
If you want, I can help you with the relevant Maharashtra VAT notification or circular references. Would that help?
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