VAT in West Bengal: Rates, Eligibility, Registration Process & Fee

Value-added Tax (VAT) was introduced on 1st April 2005 to eradicate the existence of double taxation and the cascading effect of the prevalent sales tax structure. The rules associated with VAT differ from one State to another so that the States can impose required regulations and implement the same.

This piece talks about the VAT in West Bengal and everything related to it; read on!

Value-added Tax (VAT) is a kind of indirect tax which is levied on each good and service for value-added at each stage of the production and distribution cycle. This means that starting from raw materials to reaching the penultimate retail purchase, VAT is imposed at every point in the making and distributing cycle.

In the State of West Bengal, the West Bengal Value Added Tax Act, 2003 is levied on sale of goods based on value added to taxable goods at every point of sale of these goods and on purchases of the same in West Bengal.

The VAT rates vary depending on goods and segments these items fall under. These are mentioned in the tabular format.

Note: Goods which are not mentioned under Schedule A, Schedule B and Schedule C are rated at 14.5%.

The following individuals are liable to pay VAT in West Bengal:

• An existing dealer, registered under West Bengal Sales Tax Act, 1994 or Central Sales Tax Act, 1956; or
• An existing dealer, registered but is responsible for paying tax under West Bengal Sales Tax Act, 1994 or Central Sales Tax Act, 1956; or
• An existing dealer whose gross turnover of sales or purchases or contractual transfer price goes beyond the taxable quantum on day immediately following the appointed day will be responsible for paying VAT from the appointed day, no matter the quantum of sale, or purchase, or works contract under the afore-mentioned Acts.

Here, the appointed days refer to the day from which the West Bengal Value Added Tax, 2003, came into effect.

Apart from existing dealers, there are fresh dealers who must pay VAT in West Bengal.

By fresh dealers, the Act means to point out the following individuals:

• A manufacturer or reseller of goods in West Bengal with a turnover of sales of more than ₹ 5 lakh in a financial year will be responsible for paying VAT with immediate effect; or
• A manufacturer or reseller of goods who works as a contractor and exceeds contractual transfer price of ₹ 5 lakh any time during a financial year will be responsible for paying VAT with immediate effect; or
• A manufacturer or reseller of goods is an occupier of jute mills or a shipper of jute and will be liable to pay VAT with immediate effect from date of first purchase; or
• A manufacturer or reseller of goods who sells goods which he/she purchased from outside will be responsible for paying VAT from the very first sale; or
• A manufacturer or reseller of goods is responsible for paying tax under Central Sales Tax Act, 1956, and is also liable to pay VAT; or
• A manufacturer or reseller of goods who is liable to pay tax as works contractor is liable to pay VAT on all other sales; or
• A manufacturer or reseller of goods who is a transferee of business of a registered dealer, either in part or in full, will be responsible for paying VAT from the date of such transfer; or
• A manufacturer or reseller of goods who registered voluntarily must pay VAT from the date of registration.

To register for Value-added Tax in West Bengal, one has to follow the steps mentioned below:

Step 1 - Visit the official website of the Directorate of Commercial Taxes, Government of West Bengal.

Step 2 – Navigate to VAT/CST/WBST.

Step 3 – Click on Schedules & Forms.

Step 4 – On the following page, click on VAT Forms.

Step 5 – Click on Form – 1 (Application for New Registration), Form – 1CR (Application for Composition Resignation).

Following is a list of documents that one must submit while completing VAT registration:

• Trade licence (Principal Place of Business, Branch office, if any, Warehouse, if any)
• Legal occupancy of business/factory and partnership deeds, etc.
• PAN Card (PAN Card of Company/Partnership Firm/HUF; PAN Card of the Prop./Partner/Directors/Karta of the HUF)
• Proof of Residence of the Prop./Partners/Directors/Karta of HUF: Election ID Card, Passport, Driving Licence (Not Learner’s), Ration Card, Current Electricity Bill, Current Telephone bill (BSNL Landline), Aadhar Card.
• First and the last page of Updated Bank Statement of Current Account of the Firm.
• Legal Occupancy of Principal place of Business/Factory/Warehouse/Additional Place of Business and Branch – as applicable: Ownership: Current tax paid receipt issued by Corporation/Municipality/Panchayat; Rental: Rent receipt and copy of the Tenancy Agreement, if any; Rent Free Accommodation: No Objection Certificate of the Landlord, along with Property tax receipt of the original Landlord.
• Duly signed copy of the print-out of Annexure A/B with self-attested photographs pasted thereon.
• Deed of Partnership/Memorandum & Articles of Association.
• Form 32 and 18 under the Companies Act, 1956 or in the appropriate Form under the Companies Act, 2013.

To file a return against the VAT payment in West Bengal, follow the steps mentioned below:

Step 1 – Visit the official website of the Directorate of Commercial Taxes, Government of West Bengal.

Step 2 – Click on the ‘Download’ option.

Step 3 – Download VAT e-Return Form-14, VAT e-Return Form-14D, VAT e-Return Form-15, and VAT e-Return Form-15R under the ‘Download Blank Jar Files’.

Step 4 – Upload the XML files.

Step 5 – Take a printout of the Acknowledgment receipt.

As stated earlier, VAT is an indirect tax which is levied on goods whenever it adds value in any stage of the supply chain, i.e. purchase to sale.

On the other hand, GST (Goods and Services Tax) is a comprehensive tax that subsumes other indirect taxes such as VAT. It is one single tax that is imposed on the supply of goods and services right from the manufacturer to the consumer.

In the case of VAT, the seller’s State is responsible for collecting tax. Contrarily, the consumer’s State has the liability for collecting the tax.

Now that individuals have come to know about the difference between VAT and GST and the rates of VAT in West Bengal and related information, we can conclude the discussion. Read the details carefully, download the correct forms and complete registration to initiate business in West Bengal.