Voluntary registration vs compulsory registration under mvat

Every dealer is require to get register compulsory under MVAT, whose turnover is exceeds the prescribe limit as mentioned under section 3 (4) of MVAT Act. The turnover limit for the purpose of MVAT registration is given below:

Category of Dealer          Turnover
of Sales            Turnover of taxable
good purchase or sold

Importer                              Rs. 1, 00,000                       Rs. 10,000

Other than Importer          Rs. 5, 00,000*                       Rs.2,00,000

Here importer means the dealer who purchases the good outside the state of Maharashtra. The turnover limit of
Rs. 1 lack or Rs. 5* lacks is including turnover of all sales whether taxable or tax free.  However turnover limit of Rs. 10, 000 is in respect of taxable goods whether purchase
or sold.

The dealer can also get registered under MVAT voluntarily if he does not cross the turnover limit under
section 3 (4). But for voluntary registration dealer is require to pay Rs. 25,000 as a deposit and Rs. 5,000 as a fee.

Under which circumstances voluntary registration is beneficial:-

1)      When dealer is doing manufacturing activity and require to install plant and machinery. It is always beneficial to get register under MVAT as immediately after the voluntary registration he can claim the set off on the plant and machinery purchased by him. If voluntary registration is not done; VAT paid on plant and machinery purchase will be in vain as dealer can not claim the set off during unregistered period.

2)      When dealer is trader and he want to purchase the large quantity of goods for the trading purpose before the sales starts. In such situation; voluntary registration is necessary as after registration dealer can claim the set off of
the goods purchase.

Under which circumstances compulsory registration is beneficial:-

When dealer is the small trader and he is not going to purchase the bulk material (say less than Rs. 5, 00,000), then there is no need for voluntary registration. The benefits of compulsory registration are as below:-

1)      Dealer is not required to pay the deposit of Rs. 25,000 and registration fees require to pay is Rs.500 only.

2)      Dealer
can claim initial exemption of tax liability on sales up to Rs. 5, 00,000* under section 3 (2) of MVAT Act.

MVAT
Registration is compulsory if turnover exceeds prescribe limit as mention above. In default of non-registration penal provisions of MVAT act are applicable.

* Turnover limit of Rs. 5 lakh is increased to 10 lakh with effect from 26th June 2014. Kindly refer following link for more details: http://taxclick.org/type/mvat-cst/amendments-in-maharashtra-value-added-tax-2002-in-additional-budget-2014-2015

Comments

  1. says

    Sir,

    I would like to grow Wheat Grass used for making Juice a health drink in my little grden. If I grow, I anticipate people to buy and if at all I do it, initially the sales of grass may be for Rs.2000/- pm. Upto what income, I can avaoid registration of Saestax/VAT.at this stage I can not afford heavy fees and once if I more business and a good income, I can register. For very small income shoiuld I have to register? if not allowed, I will forget this idea. What is the I should get for registration minimum? Please help.Thanks.

  2. Sonal Khopkar says

    Sir,
    We are service provider & do not have VAT registration.One of our client requires material to be supplied by us.
    Kindly suggest if VAT registration is required for this process. Also let us know the procedure if we want to continue this process in future.

  3. dinesh says

    I have dissolved my firm, so how can I get the voluntary deposit of Rs.25000/- paid during registration?

    • Prathamesh Sawant says

      Initial deposit can be refunded only between 3rd and 4th year from Date of Registration and only on application made. Department does not suo moto refund this deposit. you have to make application requesting Initial deposit refund to Refund Audit branch along with attachments of challan and copies of VAT and CST returns filed till date. applications made after the end of 4th year shall not be entertained

      • MT says

        Does that mean that after end of the 4th year from the Date of Registration, one can never apply for refund of the deposit.

        What if the firm dissolves after 4th year from DOR

        Regards,

        MT

  4. sarita jajodia says

    my qs. is registration under vat act is compulsory for doing business in west bangal? can a dealer whose turnver does not cross the threshold limit. could apply for voluratry registration ? if yes how?

    please ans soon

    • C.K.Chaurasia says

      Our firm is IT service provider and Annual Turn over is less then 10 lac. I want to know i have need VAT/Tin registration or not for sale of services. pls give reply its urgent.

  5. Ravi Vishwakarma says

    I want sell goods at Indian Marketplaces but i do not have the VAT/ CST number for the same.
    could please suggest any alternative option without deposit of Rs. 25000 can i get registration VAT/ CST.

    Awaiting your reply.

  6. Sunita Joshi says

    I want to start Online jewellery store from Home I have register my trade license but vat registration not done I want to purchase monthly 50 to 80 thousand imitation fashion jewellery can I have to pay 25000 for registration. Please reply.

  7. anand says

    I am going to start a small trading business in Mumbai suburbs, I want to know which MVAT is applicable Voluntary/Compulsory MVAT for a small trading business.

  8. Sarthak Khire says

    Sir What is Turn over Limit in respective F.Y. for Compulsory M.VAT Registration and what is Costing for It ?

  9. Sarthak Khire says

    Sir please Specify The Document List For M.VAT Voluntary and also Compulsory Registration .

    Thanks & Regards,
    Sarthak S. Khire.

  10. Shiv Deokar says

    Respect sir,

    I read your blog/information about MVAT registration on Tax Click.
    we do farming of Turmeric, Cotton,soybean, chana basically I’m a Farmer.stared selling turmeric powder under my proprietorship company called ‘Deokar farming & Products’.
    company turn over is below 3 lacks.
    I have also received IEC code.

    Which registration shold I go for?
    Voluntary registration Or compulsory registration under mvat

    I request you to please suggest us, It will be a great help for our startup.

    Best regards,
    Shiv Deokar

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