VALUE ADDED TAX
Frequently Asked Questions
1. What is VAT?
VAT is a multi point levy where the tax paid on local purchases from the registered dealer can be set off against the tax payable on the sale of goods,
other than special goods.
2. How is the method of calculation of determining the tax liability under the present Sales Tax system different from this method ?
In the present Sales tax system, tax liability of a dealer for a particular period is determined using the multiplication method i.e. The taxable turnover of a dealer for a particular period is multiplied by the rate of tax
applicable to that turnover. In VAT, the method adopted is Input Tax Credit method as stated above. This is the only difference between the present Sales Tax system and the VAT.
3. What are the taxes that will be replaced by VAT?
General Sales Tax, Resale Tax, Surcharge, Additional Sales Tax will be replaced by VAT. The Central Sales Tax Act, 1956 regulating the inter-state transactions of sale and purchase will continue. The Entry Tax on Vehicles
and Goods will continue.
4. What are rates of tax under VAT?
The rates are 1%, 4% and 12.5% on goods eligible for input tax credit.
5. Is there any special rate of tax other than above 3 rates?
Yes. There are special rates of tax on certain goods which are kept out of VAT. No input tax credit is allowable for these goods.(e.g) Petrol
6. Who are dealers under VAT?
A dealer is a person who purchases, sells, supplies or distributes the goods in the course of his business for valuable consideration. The VAT Act includes:
(1) Local authority, Company, Hindu undivided family,
Association of persons, Firm (2) Casual trader, factor, commission agent, delcredere agent, auctioneer, local branch of the firm or company situated outside the State
(3) Person who effects transfer of property in goods other than by way of sale (4) dealer in hire purchase, works contract, person who transfers right to use the goods
(5) Dealer in eatables including food and drinks (ie., hotels, restaurants and sweet stalls).(6) Port Trust, Railway Administration, Shipping, Transport and
Construction Companies, Air Transport Corporation and
Airlines. (7) Any person holding permit for transport vehicles (8) Tamil Nadu State Road Transport Corporation
(9) Customs Department, Insurance Company, Advertising
Agencies (10) Corporation or Companies of State and Central Governments
7. Who are liable for Registration?
1) Those dealers whose total turnover in respect of purchase and sales in the State is not less than Rs.10 lakhs for a year are to get registered under the Act.
2) The other dealers whose total turnover for a year is not less than Rs.5 lakhs shall get registered.
3) Casual Traders, agent of non-resident dealer and dealers in jewellery irrespective of quantum of turnover shall obtain registration.
4) Those dealers who intend to commence the business, on option, may obtain registration.
8. What is the Registration fee?
The registration fee is Rs.500/- for principal place of business and Rs.50/- for each additional place of business. (Branches, Godowns). No Security Deposit is necessary for Registration, for dealers. There is no renewal of registration under VAT and it is permanent till it is cancelled by the Department or on stoppage of business when reported by the dealer. No security deposit is necessary for Registration.
9. Who is the registering authority?
Head of the assessment circle in whose jurisdiction the dealer’s principal place of business is situated.
10. What is TIN?
The registration number allotted to the dealers is popularly known as TIN i.e. Taxpayer Identification Number. This is a eleven digit number to be quoted in all VAT transactions and correspondence