Vat registration

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This query is : Resolved

Pankaj Chhabra (Querist)

30 August 2014 Hello Sir/Madam
I am starting a new garments exports business. Earlier I was selling fabric locally. My query is do I need to register for VAT if I am exporting garments along with supplying fabric locally, considering I cross the VAT registration threshold ? I will not be selling garments locally, only fabric.

Regards
Pankaj

Pankaj Chhabra

Pankaj Chhabra (Querist)

30 August 2014 Hello Sir/Madam I am starting a new garments exports business. Earlier I was selling fabric locally. My query is do I need to register for VAT if I am exporting garments along with supplying fabric locally, considering I cross the VAT registration threshold ? I will not be selling garments locally, only fabric. Regards Pankaj

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

03 August 2025 Hi Pankaj,

Here’s a clear answer for your VAT registration query:

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### Do you need VAT registration if you export garments but sell fabric locally?

* **Exports are zero-rated or exempt from VAT** in most states, meaning no VAT is charged on exports.
* However, **local sales of fabric are taxable** under VAT.
* **If your total turnover (local sales + exports) exceeds the state’s VAT registration threshold (usually ₹5 or ₹10 lakhs), you must register for VAT.**
* Even if you are **not selling garments locally but only exporting them**, the **export turnover counts towards your total turnover** for registration purposes.
* Once registered, you can **claim input tax credit** on inputs used for both fabric sales and garment exports.

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### Summary:

| Scenario | VAT Registration Required? |
| --------------------------------- | ---------------------------------------- |
| Local sales of fabric only | Yes, if turnover exceeds threshold |
| Export of garments only | Exempt, but turnover counts |
| Both local fabric sales + exports | Yes, if total turnover exceeds threshold |

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**So, since you are selling fabric locally and exporting garments, and your turnover crosses the threshold, you must register for VAT.**

Let me know if you want help with the registration process or related compliance!

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