| REGISTRATION FOR START-UP |
| WHAT IS A START-UP BUSINESS? |
This is a new business enterprise which requires a period of time to create an
infrastructure before being in a position to commence business operations.
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| WHAT SPECIAL PROVISIONS ARE PROVIDED IN VAT FOR STARTUP
BUSINESSES ? |
Normally dealers are registered only from the date they make taxable sales. However,
in the case of Start-up Businesses a facility is provided in VAT to register them before
they make any taxable sales. Such businesses can claim credits of VAT on their
purchases for a period of 24 months while the business is being developed.
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| HOW DO I TAKE ADVANTAGE OF THESE PROVISIONS? |
You must apply for VAT registration on Form VAT 100 and for special registration as
a Start-up business on Form VAT 104. The Commercial Taxes Department will
need to be satisfied that you are setting-up a new business which will eventually
make sales of goods on which VAT will be charged.
You will have to furnish full details regarding the location of your business premises
and a summary of your business plans.
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| WHAT ARE THE CONDITIONS FOR REGISTRATION AS A START-UP
BUSINESS? |
| You will need to satisfy the Commercial Taxes Department that:- |
| a |
You are setting up a new business; |
| b |
Your business will eventually make taxable sales. A new business, which will only
make exempt sales, cannot be registered. The evidence required to satisfy the
Commercial Taxes Department can be in the form of business plans, a feasibility
study, proposed contracts, together with details of proposed capital assets and
stock purchases; |
| c |
You will keep the prescribed books and records as required by VAT Act 2005
and the Rules to that Act; |
| d |
You accept that you can only remain registered without making taxable sales for a
period of 24 months. |
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| WHEN DO I RECEIVE MY VAT REFUND? |
You must complete a VAT return (Form VAT 200) to claim a credit. If you are
registered for VAT as a start-up business you must file your VAT return by the 20th of
the following month. The credit must be carried forward monthly until you commence
making taxable sales. After you make taxable sales you will be entitled to a refund of
the tax credit if you make exports outside India. Otherwise you will have to carry the
credit forward until the month of March 2007 after the start of VAT and subsequently
to March every year thereafter and make a claim. You will of course be able to offset
the credit against the tax due on your taxable sales in the subsequent month/months.
The refund will be made to you within 90 days from the date of receipt of the claim.
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| WHAT HAPPENS IF I DO NOT RECEIVE MY REFUND BY THE END
OF THE STIPULATED PERIOD ? |
| After you have filed your VAT return, the Commercial Taxes Department will carry
out an audit visit. You must provide the tax officers with the necessary documents and
records within a reasonable time-scale. If you have met your obligations and the
Commercial Taxes Department fails to pay your refund by the due date, they will pay
you interest at the rate of 1% per month for each month or part of a month that the
refund due has not been paid. |
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