Halo All

Myself and my friend are starting an online garments sale in a very small way. We are not purchasing goods in bulk or anything. It is a start up and we will only know whether we will make revenue in a month, or two or three....

To start this business, as directed by the CA we consulted, we had to first register a partner ship deed and then we applied for PAN and TAN. Now when we want to start sales we come to know that we need VAT registration to do so. I tried to get some info from various websites and I understand that a VAT registration is required only if your turn over is to cross 7.5 lakhs mark. Now we are unsure about the turn over since it is a new product a new venture. At this point we are confused. When asked about VAT registration, our CA gave us a list or required documents and an estimate of several thousand rupees (between 20K and 30 K) for VAT registration. We are confused whether the CA really knows the thing or whether he is misleading us. 

Some seller websites have made it mandatory for VAT number.

I want to know,

1. Is it mandatory for a small start up to register for VAT to do online sales?

2. Is it mandatory for a small start up to register for VAT to do direct sales (not from a shop/office, but direct marketing at places like Hotels, Clubs etc. Do we need a VAT number on invoice when we bill them)

Please help us as we are at this dead-end. 


Posted 2 years, 2 months ago by Pramod Menon

Few points before coming to a conclusion:

  1. You will be selling online,
  2. Your market is not limited to Karntaka but you will be selling out of Karnataka too.

First, the 7.5 lakh limit is further incresed to 10 Lakhs. You do not have to get VAT if:

  1. You trade within Karnataka,
  2. Your turnover does not cross the exempted limits on year and month basis.

But since you will be dealing with buyers and sellers out of Karnataka too, you need to get VAT registration also websites such as Flipkart require that you have VAT registration to register with them.

Coming to your questions:

1. It is not mendatory if you are not liable for registration as explained above.

2. If you turnover does not cross limit, you do not require VAT registration. But keep the documentary proofs ready to explain that you turnover is below exemption limits.

Posted 2 years, 2 months ago by CA Pulkit Sharma

Thank you Pulkit.

Yes, Amazon, Flipkart etc insist on VAT. 

If I am selling the same items within Karnataka, do I need VAT number on my invoice? 

That is suppose if I sell my items to a Hotel/Business house etc, when I give them invoice/bill, do i need a VAT number on that? 



Posted 2 years, 2 months ago by Pramod Menon

If you do not have VAT, question of writing VAT number(TIN) on invoice does not arise.

Posted 2 years, 2 months ago by CA Pulkit Sharma

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