What Is VAT in Tamil Nadu?

VAT in Tamil Nadu was introduced on 1st January 2007, with its operation solely controlled and conducted by the state rules and regulations. Under the Tamil Nadu VAT Act, Section 2(49) specifies that this type of indirect tax will be imposed on the sale of commodities, inclusive of every point of sale, till it reaches the ultimate customer.

The Commercial Taxes Department is responsible for taking decisions on VAT rates in Tamil Nadu. Under the supervision of this governing body, registration, payment and filing of VAT is carried on.

What Is Value Added Tax?

Value Added Tax (VAT) is an indirect tax which is levied on goods and services at every stage of a supply chain, which includes from initial production to final consumption. VAT is a consumption tax as it is paid by a final consumer.

This context highlights the VAT in Tamil Nadu and its various aspects for assessing who is applicable under this taxation system.

What Are the VAT Rates for Goods or Services in Tamil Nadu?

The VAT rates in Tamil Nadu applicable on goods are divided into Schedule A, B, and C. Here's a list of all following goods that fall under specific tax rate:

Schedules	Applicable Goods & Services	VAT Rates in Tamil Nadu
Schedule A	Noble metals, bullion, precious stones like diamonds, emeralds, rubies, pearls, worn-out or beaten jewellery, gold, silver, etc.	1%
Schedule B	Agricultural equipment, acids and chemicals of all kinds, bamboo, aluminium conductor steel reinforced	5%
	Imitation jewellery, bakery products, the bark of plants, bleach liquid, beds, pillows, beedi leaves, biomass briquettes
	Bolts, nuts, bone meal, capital goods, chemical fertilisers, coal tar, coffee beans, etc.
Schedule III	Absolute alcohol, all kinds of adhesives, air-conditioning plants, apparatus for steam or making coffee	14.5%
	Binoculars, optical telescope, mobile phones, bulldozers, bulbs, horns, tyres, tubes, gunpowder, DVDs, etc.
	Arms and explosives, asbestos sheets, tobacco, batteries

There are more than 100 products that fall under Schedule B and Schedule C, respectively. Hence, dealers and traders of any type of commodities must know different VAT rates on applicable items.

Who Should Pay VAT in Tamil Nadu?

According to Section 3 of the Tamil Nadu VAT Act, tax is imposed on dealers and traders falling under following categories:

All nature of businesses incurring annual turnover of Rs. 10lakhs or more.
Businesses conducting trade or selling and purchasing activities outside the boundaries of Tamil Nadu.
A business which does not hold registration in Tamil Nadu, however, operates there.
Lastly, all traders, dealers and businesses operating within the state are involved in purchasing and selling goods.

Irrespective of above-mentioned clauses, as per the Tamil Nadu VAT rules, registration under this is mandatory for all nature of traders, brokers, and businesses that are incurring an annual turnover of Rs. 5 lakh or exceeding the limit.

How to Register for VAT in Tamil Nadu Online?

Under the Tamil Nadu VAT Act, dealers are to be registered by the Head of the Assessment Circle, who is responsible for managing all principal places of business. With the availability of an online portal, registration for VAT can be processed in quick steps:

Step 1: Visit an official website of the Commercial Taxes Department of the Tamil Nadu Government.

Step 2: Click on the registration button to proceed.

Step 3: Provide necessary information and upload documents as requested.

Step 4: Upon completion, one will assign a temporary TIN (Taxpayer Identification Number) number for processing the registration further.

Step 5: In this step, the assessee pays registration fee.

Step 6: In this final step, verification will take place from the Government’s end to check the validity of an application and uploaded documents. Additionally, a permanent TIN number will be allotted, followed by a Certificate for registration.

What Are the Documents to Upload for the Registration of VAT in Tamil Nadu?

To complete with successful registration of the VAT in Tamil Nadu, an assessee needs to upload following documents:

Address proof of the Directors like a lease agreement
Memorandum of Association & Article of Association; if it is a company
Copy of a Partnership Deed; if it is a partnership firm
Incorporation certificates of the company; if required
Company PAN card or Individual PAN card
Any ID proof of the Director like PAN card, driving licence, Voter ID card, etc.
Lease or rental agreement of the company
Passport size photograph of Director/Partner/Sole Proprietor

How to File a Return Against the VAT Payment in Tamil Nadu?

As per the VAT rules in Tamil Nadu, there are distinct forms for filing VAT returns applicable to general assesses and special resellers. One should do return filing on or before 20th of every month. The e-filing of VAT in Tamil Nadu involves simple steps, through an official portal of the tax department.

How Is VAT Different From GST in Tamil Nadu?

The inception of GST (Goods and Service Tax) in India introduced a new approach to the Indian Tax Collection System. Like VAT, GST is an indirect tax and came into force to establish uniformity in the rate of taxes in India. The primary objective of the same is to enable one tax rate for different categories of products and services.

The Value Added Taxation system included distinct rates of interest in different states in India. As the State Governments significantly formulate the tax rules, the provisions and VAT rates in Tamil Nadu and other states also vary. This brings disparity in the taxation structure, which also affects the tax collection in India. Hence, establishment of the GST rules and provisions in India was successful to quite an extent in demolishing the cascading effect of the traditional indirect taxation system..

Frequently Asked Questions

✓ What is the definition of a dealer in the Tamil Nadu Vat Act?

According to this specified Act, a dealer is any person who makes sales or supplies, purchases or distributes goods holding commercial purposes. In addition to this, it also includes a company, local authority, casual trader, hotels, and individuals involved in a transfer of property.