VAT in Karnataka
VAT in Karnataka is explained in a nutshell below.
The VAT act extends to the whole of Karnataka. Governed by the Karnataka Value Added Tax Act, 2003, VAT is applicable on sale of goods and products in the state.
It is mandatory for every dealer to be registered under the said Act, if:
- the taxable turnover is likely to exceed Rs 10 lakhs during the financial year (or)
- the taxable turnover exceeds Rs 83,300 in any one month during the financial year.
- a dealer who imports or exports goods out/from the State of Karnataka
- casual dealers entering into any occasional transaction of purchase and sale in a state without carrying on a regular business
In addition to the above, it is pertinent to note that voluntary and suo-moto registration is allowed. Also a dealer who is engaged in sale of exempted goods or a dealer whose turnover is below the prescribed limit is exempt from registration.
In addition to this every casual trader and every non-resident dealer or his agent shall be liable to register, before the commencement of his business, irrespective of the value of the taxable goods sold.
In addition to the above, any person intending to commence business in Karnataka can get Karnataka VAT Registration. The entire process takes about 15 to 20 days as it does involve physical verification of the premises as well.
On obtaining the registration certificate, the same shall be displayed in a prominent location at the main place of business. Also certified copies shall be displayed at the additional business places.
Karnataka VAT Rate
VAT rates are based on commodities that fall under the respective schedules I to IV. The following is the Karnataka VAT rate for each category;
- Items mentioned in Schedule I are exempt from VAT – (eg, agricultural implements operated manually, betel leaves, diesel, etc.)
- Items mentioned in Schedule II are taxed at 1 percent (i.e, bullion)
- Items mentioned in Schedule III are taxed at 5.5 percent(eg, agricultural implements not operated manually, bricks , arecanut and powder, ball bearings, etc.)
- Items mentioned in Schedule IV are taxed at 20 percent(eg, narcotics, molasses, ethyl alcohol, etc.)
- In addition to this goods not covered under any schedule are taxed at 14.5 percent
- Cigars, cigarettes, gutkha and other tobacco products are taxed at 20 percent.
Karnataka VAT Return Filing
- Every dealer shall submit a monthly return, within 20 days after the end of the month.
- Composition dealers are required to file returns on a quarterly basis if their annual taxable turnover is under Rs 25 lakhs, within 15 days after the end of the relevant quarter.
- A casual dealer will have to file monthly return in Form VAT 110 with proof of payment within 10 days after the end of the month. If he stops his occasional transaction during the course of a month, monthly return shall be filed in VAT 100 within 7 days of the completion of the last transaction.
- Where the dealer leaves the jurisdiction, he shall before leaving and immediately following the closure of the said transaction, submit the final return along with the full payment of tax.
Karnataka VAT Payments
In Karnataka, dealers having turnover under Rs 25 lakhs are required to pay or deposit VAT tax on or before the 15th day form the end of each quarter. Dealers having greater than Rs 25 lakhs of sale turnover are required pay or deposit their Monthly Karnataka VAT payment or deposit on or before the 20th day from end of the month.