My Student got Export Order But....

[Kishan Barai]

My student got Export Order of Java Peanuts but buyer asked to do Pre-shipment inspection of goods. All company is asking for a purchase bill. Now 5% VAT has to be paid to mfg unit if purchased against bill. My student (Exporter) does not have reg. in VAT department as it is too costly in Gujarat (need to pay 25,000 adv. Tax), so how can he avoid VAT in legal sense ? How can he export goods tax free & earn reasonable profit. He is earning total 9.5% profit in this deal. If he pays VAT (which he should not pay as it is exports) he will get -5% = 4.5% profit.

Please help us to save a deal.

[Ganeshan Kalyani]

VAT can be saved only by being a registered dealer under VAT. Thanks.

[Kishan Barai]

Thank you sir for your kind reply.

[Ganeshan Kalyani]

Sir, only voluntary registration requires deposit of the amount mentioned in your query. And if the taxable value of the goods is above ₹ 10,000/- and aggregate turnover is above five lacs then registration is required to be sought without any deposit. Hence you may check the value of the goods and according may conclude. Thanks.

[Kishan Barai]

Thanks a lot Ganeshan Kalyani Sir for your reply

but I need to clarify 2 things

1. My student does not have turnover of 5 lakh or more, so his case is not applicable for mandatory registration.

2. I did not got your point "only voluntary registration requires deposit of the amount mentioned in your query"

Thanks a lot for your kind support.

[Ganeshan Kalyani]

Sir if a dealer wish to get registration under GVAT voluntarily then a deposit of ₹ 25K is required to paid, otherwise not. This implies that if a dealer has crossed the threshold limit of registration and as a result is anyway now required to get registered in order to collect and deposit the tax into Gvt. treasury then the said security deposit is not required.

This is astonishing to learn that why a dealer is required to deposit a security amount for voluntarily registration. But this is what law says.

[Kishan Barai]

Thank You Ganeshan Kalyani Sir

[Rizwan Ullah]

As far as my understanding on the subject, Mr. Zia Ullah , u r a manufacturer exporter and not a merchant exporter, in that case u need to get yourself registered with the Department.

AI Summary

VAT registration can be necessary to avoid VAT on exports; voluntary registration may require a security deposit. Exporter risks VAT when a buyer requires a purchase bill for pre shipment inspection. Adviser responses state VAT can be avoided only by being a registered dealer; voluntary registration in Gujarat requires a security deposit, while registration compelled by statutory turnover or transaction value thresholds does not require that deposit. A manufacturer exporter typically must obtain VAT registration to meet compliance and documentation obligations for exports.