Who Should Register?
You are required to register under DVAT if: 1. Your turnover in the year preceding the commencement of the DVAT Act exceeded Rs 5 lakhs; 2. Your turnover in the current year exceeds Rs 5 lakhs; 3. You make any interstate sale; or 4. You make interstate purchases for resale in Delhi.
For registration purposes, your turnover does not include 1. Sales of capital assets; 2. Sales made in the course of winding up your business; and 3. Sales made in the course of a permanent diminution of your business. In the case of dealers involved in the execution of works contracts, the turnover includes the total contract amount.
If you are not already registered, your obligation to register and pay tax starts on the day when your turnover exceeds Rs 5 lakhs, or you make an interstate sale or purchase. You need to apply for registration within 30 days, once you cross these thresholds.
If you deal entirely in exempt goods, you are not required to apply for registration under DVAT.
If you are making sales to other registered dealers in Delhi, it may be beneficial for you to apply for registration even if your annual turnover is less than Rs 5 lakhs. Registration will allow you to issue tax invoices and claim tax credits. The tax that you charge on your tax invoices can, in turn, be claimed as a credit by your customers who are registered dealers. To accommodate such situations, the legislation allows you to apply for voluntary registration, if you fall outside the conditions for mandatory registration.
If you have more than are one place of business, you can apply for a single registration. Registration for Dealers Already Registered Under DST/CST To facilitate transition to the new system, if you are already registered on 31st March 2005 under the Delhi Sales Tax (DST) Act, Delhi Sales Tax on Works Contract Act, Delhi Sales Tax on Right to Use Goods Act and/or the CST Act, we will automatically register you under DVAT. However if you are registered only under DST and your turnover in 2004-2005 is less than Rs 5 lakhs, you may write to us to not automatically register you under DVAT. How to Register? An application for Registration is to be made in Form DVAT-04 with the prescribed fee.
A security not exceeding Rs 1 lakh is to be submitted along with the application for registration. The security amount can be reduced by a maximum of Rs 50,000 if you can provide certain documents with your registration application. The reduction in the security amount allowed for various documents is as follows. 1. Last paid electricity bill in your name, Rs 10,000; 2. Last paid telephone bill in your name, Rs 5,000; 3. A PAN number, Rs 10,000; 4. A document as proof of ownership of principal place of business, Rs 30,000; 5. A document as proof of ownership of residential property, Rs 20,000; and 6. A notarized photocopy of the passport of proprietor/ managing partner or managing director, Rs 10,000
Security may be in cash, bank guarantee, post office cash certificates, bonds/debentures, dealers' surety, or mortgage of immoveable property. The surety for registration may be revised by the Commissioner under some circumstances. When Will You be Registered If you do not hear from us within 15 days of making your application, you are automatically registered and will be entitled to receive a registration certificate in Form DVAT-06 from the Commissioner. Once you are registered, a Tax Identification Number (TIN) will be issued by us, which you should quote in all dealings with us to help us process your tax affairs correctly and promptly.
If you are not registered within 15 days of making the application, you will receive a notice in Form DVAT-05 from the Commissioner, setting out the reasons why your application is proposed to be rejected.
You can respond to this notice within the time provided in the notice. If you do not respond to the Commissioner's notice, your application for registration will be rejected automatically.
If the Commissioner is satisfied with your reply, he will register you and issue you a Registration Certificate in Form DVAT-06.
If your application is rejected, you can object to the decision within two months.
After registration, you may expect a visit from a DVAT official who may verify the particulars of your business.
Rights & Responsibilities as a Registered Dealer Once you are registered for DVAT, you will be: 1. Required to pay tax at the appropriate rate on sales made in Delhi; 2. Eligible to claim tax credits in respect of your purchases for which you have valid tax invoices; 3. Eligible to claim refunds where the credits exceed your output tax; 4. Eligible to issue tax invoices; 5. Required to file periodic returns; and 6. Required to prepare and maintain proper records and books of accounts.
Credit for Stock Brought Forward During Transition
As a registered dealer, you will be entitled to claim a credit for the Delhi Sales Tax already paid on your opening stock held in Delhi on April 1, 2005, the date of commencement of the DVAT Act. The credit will allowed in respect of 1. The trading stock; 2. Raw materials; and 3. Packing materials for trading stock
There are additional conditions for claiming this credit, as follows: 1. The goods for which the credit is being claimed must have been bought after April 1, 2004. 2. The goods must be for use in making a taxable sale under DVAT, or for export or inter-state sale from Delhi. 3. You must hold a valid invoice issued by a dealer registered under the DST Act, showing the amount of DST paid. In the absence of such invoice, the credit amount will be based on the tax that would have applied at the applicable DST rate on 75% of the price paid for the opening stock. 4. If your claim for the credit exceeds Rs. 1.00 lakh, you must submit a certificate signed by an accountant certifying that the credit claimed is true and correct.
Amendment/Cancellation of Registration Certificate As a registered dealer under DVAT, you must make all efforts to keep your registration details up to date. You must inform the Commissioner within one month in Form DVAT-07 if you: 1. Sell your business or any part of it; 2. Effect or come to know of any other change in the ownership of the business; 3. Discontinue your business or change your place of business or warehouse, or open a new place of business, or close the business for a period of more than one month; 4. Change the name, style, constitution or nature of your business; 5. Enter into partnership or other association; or 6. Add, delete, or change the particulars of persons having interest in business.
De-Registration You are required to apply for cancellation of your registration in Form DVAT-09 within 30 days of the occurrence of any of the following events: 1. You cease to carry on any activity which entitled you to be registered as a dealer under the DVAT Act; 2. You are an incorporated body and you close down or otherwise cease to exist; 3. Your firm or association of persons is dissolved; 4. You cease to be liable to pay tax under the DVAT Act; or 5. Owner of a proprietorship business dies, leaving no successor.
If you are required to apply for cancellation of your DVAT registration, you will have to pay tax on the stock in hand on the date of de-registration, equal to the higher of the following amounts: 1. The tax that would be payable if the goods were sold at their fair market value; and 2. The tax credits previously claimed in respect of those goods.
Registration of a Casual Dealer If you do not carry on business in Delhi on a regular basis, but make sales on an occasional basis, e.g., during an exhibition or trade fair, you would need to apply for registration as a Casual Dealer. Specials rules and procedures are put in place to expedite the registration of casual dealers and to process their tax returns and remittances.
If you are a casual dealer, then you need to apply for registration in Form DVAT-4A three days prior to the commencement of business activities in Delhi. As there is no threshold amount of sales for registration as a casual dealer, you need to register and account for DVAT regardless of the volume of your turnover. You will be asked to deposit security, in cash or in the form of bank draft, as may be fixed by us which will not exceed the estimated liability to pay tax for seven days or for a lesser period for which you are conducting your business.
After verification of the information furnished by you and on receiving the prescribed security, we will register you as a casual dealer.
Consequences of Registration as a Casual Dealer As a casual dealer, your procedures for accounting for tax will be as follows: 1. You pay tax daily on the sales made in the previous day. 2. You submit a DVAT tax return in prescribed form after conclusion of your business in Delhi. 3. You are not allowed to issue a tax invoice. 4. You will be issued prescribed forms by us for transportation of goods to and from Delhi for the purpose of your business. 5. You will account for the used forms and surrender the unused ones along with the tax return to be submitted at the conclusion of your business in Delhi. 6. We will assess you within five days of submission of your tax return and the forms for movement of goods. On completion of the assessment, we will refund you the balance amount of your security, after adjusting for any tax or dues payable.
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