VAT in Kerala: Rates, Eligibility, Registration Process & Fee

The Value Added Tax in Kerala is implemented under the guidelines of the Kerala Value Added Tax Act. Further, when many states refused to implement VAT, Kerala had already started its implementation in 2003. A few states initially opposed this tax because it is a regressive tax and burdens low-income consumers unnecessarily.

This blog will discuss in detail what is VAT in Kerala and its elements like registration procedure, fees, etc.

What Is Value Added Tax?

Value added tax or VAT is a goods and services tax levied on the ultimate sales of those products to the consumers. Moreover, this tax is imposed on every stage where value is added. This includes the initial production stage to the point of sale. Furthermore, the VAT is under the purview of state governments in India.

As VAT is a multipoint goods and services tax, the sellers or producers can pass on the liability to pay for it to the consumers. Additionally, the Kerala VAT Act has certain rules and regulations regarding rates and registration specific to that state.

What Are the VAT Rates for Goods or Services in Kerala?

Kerala VAT rates are divided into four categories or schedules. These schedules are explained in a tabular format below:

Schedules	Applicable Goods or Services	VAT Tax Rate in Kerala
Schedule I	Manually operated agricultural tools	0%
	Aids for disabled people like hearing aids and etc
	Coconut, fresh fruits and vegetables
Schedule II	Precious stones and metals, semi-precious stones	1%
Schedule II	Rice, edibles oils and flour (wheat, corn, maize, rice)	1%
Schedule III	Utensils, bakery tools and products, casting iron	5%
Goods and services not included in any schedule	Cigars and Cigarettes	13.5%
Some other products that have higher VAT	Plastic bags and Aerated drinks	15%
	Branded aerated drinks and plastic handbags	20%
	Tobacco derivatives and PAN masala	22.5%

Who Should Pay VAT in Kerala?

Individuals who should pay Value Added Tax in Kerala are as follows:

Any dealer or manufacturer whose annual sales turnover in a particular financial year is more than or equal to Rs 10 Lakhs.
Business owners who import and export goods and products from Kerala to any other state in India.
Sellers dealing in products related to gold, silver, platinum and other precious metals, stones, or ornaments made of these elements.
Any dealer from outside Kerala doing business in the state or has branches, warehouses or places of business there.
Broker, commission agent, auctioneering or other individuals working in similar professions.

How to Register for VAT in Kerala Online?

According to Kerala VAT Act, all eligible dealers and business owners should register their business for VAT payments. They can do so through both online and offline modes. However, registering online makes the procedure far more convenient, and business owners outside Kerala who have businesses in this state can register without any hassle.

Following is a step-by-step guide on how to register for Kerala VAT online:

Step 1: Visit the official portal of the Kerala commercial tax department

Step 2: Select the e-Registration tab below on the screen

Step 3: Applicants need to enter details like application type, district, list of value, office name, business PAN, the constitution of business, login name and password

Step 4: Individuals need to fill up certain forms based on their requirements. These forms include:

This is an application form for online registration
1a – This is for a certificate of registration
1af – This is a format of affidavit to be filed by multi-level marketing entities for registration
1b – These include Online Application For Salesman Permit / Exhibition Or Exchange Mela / Compounding / Liability Certificate / Registration Renewal
1c – Specifically meant for Salesman Permit
1d – Specially meant to get permission for conducting exhibition / Exchange Mela
1e – Applicants need to fill this form to get permission to pay tax under the compounding scheme category – Work Contracts / Gold / Cooked Food / Bar Hotels - Cooked Food / Bar Hotel Liquor / Metal Crushers / Cd Libraries / Medicine
1ee – This is for the Liability Certificate
1f – This form is an application for permission to collect & pay tax for those whose total turnover is below the limit
2 - Partners need to fill this form of declaration
2a - Form for furnishing details of authorised signatures
3 – Retiring partners need to fill this form of declaration
5b – This form is for De-Registration
6 – This is a Security Bond form
6a – This is a Security Bond for a stay of collection of tax, fee, etc.
6b – This is an Indemnity Bond
6c - Bank guarantee form
6d - It is a notice demanding security for registration
7a – Form to get Salesman Permit
7aa – This is a form to get authorisation for a travelling salesman
7b - Transit Pass
7c – Form to get a permit for transport of notified goods
8 – This is for tax invoice to VAT Dealers
8b – To get a retail invoice for customers
8c – To get an invoice for works contract
8ca – This is to get an invoice for works contract (for compounded category)
8d – To get sale bill for presumptive taxpayers
8e – This is for Purchase Bill
8f – Declarations form
8fa – These are Declaration of goods brought through coastal cargo/railways/airports

Step 5: Applicants need to submit documents like:

Proof of ownership of business and place of business, like lease agreement or purchase documents
Documents like passport & election card of the owner (s)
Copies of customs and central excise authority issued a registration certificate
Xerox of last electricity bill and Property Tax bill of the place of business

Step 6: After filling up all this information individual need to click on “Save Changes”

Step 7: Applicants will be provided with VAT registration number after verifying all documents which they need to save for future reference

How to Pay for VAT Registration Fee in Kerala Online?

Applicants can pay a VAT registration fee in Kerala through online modes. One needs to follow the steps below:

Step 1: Individuals need to register their business first. After that, they can log in to their account on the official portal and then move to the payments section

Step 2: In the payments section, business owners must choose an online payment method like net banking

Step 3: From the official portal, the individuals will be redirected to the net banking page of the bank

Step 4: In this stage, individuals need to enter their bank details and the transfer the fee amount

Step 5: Post completion of payment, the portal will present an acknowledgement slip which the business owner/dealer needs to preserve for future reference

How to File a Return Against the VAT Payment in Kerala?

Dealers and manufacturers operating in Kerala or residing in the state must file periodic and annual VAT returns in Kerala. Dealers who pay Rs 10 lakhs VAT can file for return against VAT payments. These dealers should file for returns before the 15th of each month.

In contrast, dealers who pay VAT of more than Rs 25,000 but less than Rs 10 Lakh are required to file their VAT returns on or before the 20th of every month. Further, dealers who do not fall under either of these categories should have their VAT returns filed on or before the 25th of each month.

Additionally, all business owners should file annual VAT returns on or before 30th April for every financial year. Following are the steps to file for VAT returns in Kerala through an online medium:

Step 1: Business owners need to login to the official website of Kerala Commercial Taxes department

Step 2: If the individual is entering the website for the first time, one might be asked to change password

Step 3: Dealers need to download the Form 14D in pdf format

Step 4: After downloading the form, one needs to fill it with applicable information duly

Step 5: Upload the duly filled form in .xlm format

Step 6: Post uploading the form, the business owner needs to generate an acknowledgement slip

How Is VAT Different From GST in Kerala?

GST is a goods and services tax, and it has replaced the indirect tax formats like VAT from most states in India. GST is advanced and has a “one nation, one tax” policy. Moreover, replacing VAT has eliminated the cascading effect on the country’s economy. Similarly, in Kerala, like most other Indian states, the GST is charged instead of VAT for most commodities.

The e-filing for returns and registration process for GST is the same for every state. Unlike VAT, which is under the jurisdiction of state governments, each state government has a different rule.

This blog has discussed the rates, registration process and e-filing for returns for Value Added Tax in Kerala.

Frequently Asked Questions

✓ How much VAT is levied on petrol in Kerala?

Kerala levies ₹24.9 per litre {30.8% of (fuel price charged to dealers + excise duty + avg. dealer commission)} VAT on petrol.

✓ How much VAT is levied on diesel in Kerala?

The percentage of VAT charged on diesel for every state is 22.7%. However, Kerala charges an additional sales tax of Rs 1 per litre and a 1% fuel cess.

✓ What are the different types of VAT applicable in India?

Dealers can face three different types of VAT applicable in India, and they are:

Standard rated
Zero rated
Exempt supplies