The traditional Sales Tax has been replaced by the term VAT Registration. It is important to know that VAT / TIN / CST are all the same. VAT is a tax levied on goods sold in India. It is mandatory for every entrepreneur to pay VAT on goods sold if he crosses the turnover of Rs 5 Lakh in any financial year for the first time. Once he crosses the turnover, it is mandatory for him to obtain the VAT Registration and start charging the VAT to his customers. Also, once he crosses the limit, he has to pay VAT on all the goods sold in any financial year regardless of what turnover he achieves in any given financial year.
Some goods are exempted from VAT, such as Solar Energy Products, etc. But still, VAT Registration is compulsory and filing of returns is also obligatory hence. These laws differ as per states, hence it is necessary to analyze these laws in accordance to the state in which the products are being sold and price them accordingly.
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Frequently Asked Questions
Is VAT / TIN & CST the same thing?
Yes, they are covered under the same registration certificate but VAT / TIN are paid to the state government whereas CST is paid to the central government of India.
In which states is VAT / TIN & CST applicable?
In all states of India VAT / TIN & CST is mandatory after exceeding the respective state turnover limits.
What is the turnover limit after which registration is required?
In some states mandatory registration is required after Rs 5 Lakhs of turnover and in some states it is Rs. 10 Lakhs.
Is VAT or CST applicable on exports?
No, this tax is not applicable for goods exported out of India.