TAX INVOICE

[Asked by Guest]

PLEASE CLARIFY ABOUT THE TAX INVOICE, I AM SELLING PRODUCTS TO MY DISTRIBUTOR

FOR THE DISTRIBUTOR PRICE EX 30 IN TURN IF THEY SELL THE PRODUCT FOR 34 THEY HAVE TO

PAY VAT FOR THE DIFFERENCE, IF THEY DONT HAVE THE TIN NUMBER WHAT CAN BE DONE

( I AM PAYING THE TAX FOR ₹ 30/-) ALL ARE SMALL OPERATORS AND THEY DO BUSINESS OF

2 TO 3 LAKHS PER ANNUM, AND THEY CAN GIVE ORDINARY BILLS TO THEIR CUSTOMERS OR NOT

PLEASE ADIVSE

THANKS

[Ganeshan Kalyani]

Sir,

Value Added Tax (VAT) is a tax on value addition on goods. Each registered dealers, in the distribution chain, are supposed to charge VAT and pay to exchequer on the value addition made to the goods being sold. The requirement of registration is compulsory if the dealer's taxable turnover is more than the limit set for registration in the VAT Act of respective States. Your distributor's taxable turnover is below the limit and therfore he has not registered under VAT. The Vat paid by him on purchases of goods from you becomes his cost. Since he is unregistered dealer he cannot collect VAT from his customers. Thanks.

[Ganeshan Kalyani]

Yes, they can issue retail invoice or cash memo or other documents in absence of registration. Tax Invoice can be issued only by a registered dealer. Thanks.

AI Summary

VAT registration requirement prevents unregistered distributors from issuing tax invoices or collecting VAT on resale.
Value Added Tax registration governs issuance of a tax invoice: distributors whose taxable turnover is below the registration threshold are unregistered dealers, cannot collect VAT from customers, and the VAT they pay on purchases becomes their cost. Unregistered dealers may issue ordinary retail invoices or cash memos, while only registered dealers may issue tax invoices and charge and remit VAT on value addition.