Delhi Value Added Tax (DVAT) Registration Requirement, Turnover Limit, Mandatory Registration, Voluntary Registration
DVAT Mechanism and Calculation of Tax Liability
Manufacturer, Wholesaler or retail dealer charges tax on sales. However the dealers are allowed to claim credit for the tax already paid on purchase of materials sold or material inputs, and is required to pay only the net amount of tax to the government. This credit offset mechanism ensures that the tax des not accumulate as goods pass from the manufacturer to the wholesaler or retailer.
Net tax payable by a dealer can be calculated between total tax charged on its sales (out put tax) during a given period and the tax paid on its purchases (input Tax) during the period. If the out put tax for the period exceeds input tax, the difference amount of tax is payable to the government. If the input tax exceeds output tax, the dealer is entitled to a refund of the excess, or to carry forward the excess to be offset against tax payable in future period.
Under Delhi Value Added Tax (DVAT) Mechanism, the tax rolls forward at each intermediate transaction to the point of final sale to the consumer. When the goods reaches the consumers, the total tax paid by all intermediate dealers equals the tax on the final sale price of the goods.
Standard Rates of DVAT
The standard rate of Delhi Value Added Tax is 12.50%.
Other rates are 1%, 5% and 20% apply to certain specified goods such as gold and silver articles, coarse grains, garments and petroleum.
Turnover Limit to Register with DVAT and Registration requirement
If the dealer is not already registered, obligation to register and pay tax starts on the day when turnover exceeds Rs. 20 lakhs or the dealer make an interstate sale or purchase. Other dealers who are interested to register with DVAT can also register voluntarily before reaching the turnover limit.
Time limit to apply for registration with Delhi Value Added Tax (DVAT)
The dealer needs to apply for registration of VAT within 30 days, once the turnover crosses the thresholds.
Penalties for various defaults under Delhi Value Added Tax (DVAT) Act