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VAT in Delhi

VAT means Value Added Tax.  VAT is a multi-point tax on value addition, which is collected at different stages of sale with a provision for set-off for tax paid at the previous stage/tax paid on inputs.  In other words, it is levied at each stage of production and distribution from raw materials to the final sale based on the value (price) added at each stage.

VAT in DelhiDelhi VAT Registration under Delhi Value Added Tax, 2004:

Two types of registration exist under the scheme of Delhi Value Added Tax, 2004 (herein after referred as DVAT); one is Voluntary Registration and the second is Mandatory Registration.

A dealer can apply for Voluntary Registration in cases where he is not required to get mandatory registration and he is a dealer or he intends to start his business in Delhi from a particular date, which would make him a dealer.

It becomes mandatory for a dealer to register with the Sales Tax Department upon the following developments:
  1. In case of a dealer when already engaged in a business, his turnover in the current year exceeds Rs 10,000,00
  2. He is liable to pay tax or is registered or is required to be registered under Central Sales Tax Act, 1956, which requires the dealer to make any inter-state sale or purchase
  3. In case of casual trader, three day prior to commencement of business in Delhi
Registration as a Casual Trader calls for different rules. They are:
  • Dealer needs to pay tax daily on sales made on the previous day
  • Tax invoice cannot be given by casual trader
  • Casual trader may submit his returns immediately after conclusion of his business in Delhi
  • (A casual trader is one who does not carry his business activities in Delhi on a regular basis. For example, during exhibitions, trade fairs, etc.)

Delhi Vat Forms:

A dealer or a trader can apply for registration under various schemes, whichever is applicable to him by duly filling all the necessary details in the Delhi VAT Forms. Here is a comprehensive list of the various forms made available by the Government for different purposes:

https://dvat.gov.in/website/frmdvatforms.htm to view the list.

What is the VAT Rate in Delhi?

Different commodities have different VAT Rates. There are some commodities that are tax-exempted while some are taxed.

The Delhi VAT Schedule lists all the commodities, organisations, goods, and individual dealers that fall under the purview of VAT.

Here is a brief list of the VAT Rate in Delhi as per the Schedule:VAT on Restaurant Bill
  • Nil: Goods and services that fall under this category are exempt from VAT. These are mainly items that are basic and sold in the unorganized sector. Examples of such items include khadi, salt, etc.
  • 1%: VAT is charged at 1% for the items under this category. 1% VAT is usually charged on relatively expensive items. The reason why VAT is charged at 1% on expensive goods is that increasing the rate of VAT will considerably increase the prices of the items that fall under this category. Some of the examples of products that fall under this category include gold, silver, precious stones, etc.
  • 4-5%: VAT is charged at 4% to 5% on certain items that are used on a daily basis. Examples of items that attract VAT at 4-5% include cooking oil, tea, medicines, etc.
  • General: Items that fall under the general category attract VAT at 12% to 15. The items that fall under this category are mainly luxury items such as cigarettes, alcohol, etc.
There are Seven Schedules under VAT, each of which provides a detailed list of payment and non-payment of taxes.

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