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Gujarat Commercial Tax

Gujarat, a state in western and northwestern India with the capital Ahmedabad, is the third-largest state economy in India with ₹14.96 lakh crore (US$220 billion) in gross domestic product. Along with Bihar and Nagaland, Gujarat is one of the three Indian states to prohibit the sale of alcohol.

The Commissionerate of Commercial Tax is the nodal agency for the administration and collection of various taxes in the State of Gujarat. The Commissionerate functions under the Finance Department of the Government of Gujarat. It is responsible for administering the rules and regulations for Value Added Tax (VAT).

Note: VAT does not apply in Gujarat since the implementation of GST. The Goods & Services TAX has replaced all Central and State indirect taxes like CENVAT, excise, customs, VAT, state excise, etc.

VAT (Value Added Tax) in Gujarat

VAT is a tax that is charged based on the category of goods sold. It is an indirect tax which replaced the general Sales Tax and is applicable on all goods and products sold in the state of Gujarat. Thus, any merchant who states a sale or purchase of minimum Rs. 5 lakhs is liable to pay VAT as per the VAT Act. This is further exercised on the basis of ‘Schedules’, a list of goods which can be subjected to tax, exempted from tax or treated under a different rate of interest. The rates, as per the schedules are as follows:

  • Schedule 1: Gives a detailed account of goods which do not fall under the category of VAT or exempted from VAT.

  • Schedule 2: A bevy of different rates depending upon the goods given under the category, such as bicycles, periodicals and journals and electricity.

  • Schedule 3: A list of different tax rates, depending upon the goods specified such as the sale of aviation fuel, diesel (high speed) and so on.

Note: The exemption for Schedule 1 can also be extended to aids of any kind used for people with disabilities, such as Braille equipment, hearing aids, speech trainers, wheelchairs, crutches, orthopedic footwear, heart valves, intraocular lens for cataract operations, etc.

Additionally, Section 3 of the Gujarat Value Added Tax Act, 2003 provides for levy and imposition of VAT and the conditions laid down therein. All such merchants must apply for both VAT Registration and Central Sales Tax.

As per the amended Act, VAT is applicable if:

  • The turnover is more than 5 lakhs.

  • The taxable income is Rs. 10000 plus.

Goods under Schedule 2

The list of goods which are taxed at the rate of 4 paise for every 1 rupee.

  • Agricultural equipment that does not fall under schedule 1

  • Materials made out of Bamboo

  • Bicycles, tricycles, rickshaws, pedal rickshaws and their respective accessories

  • Betel and areca nuts

  • Unbranded biscuits

  • Brass metal parts

  • Bricks and roofing tiles

  • Wax candles

  • Trunks, buckets and drums

  • Bolts, nuts, screws and fasteners

The list of goods which are taxed at the rate of 1 paise for every 1 rupee.

  • Gold and Silver

  • Precious metals and jewellery made out of these metals

  • Pearls

  • Precious and Semi-Precious stones

Additional products under Schedule 2 can be extended to drugs & medication, medical equipment’s, edible oils, all types of fabric, herbs & barks, dyes, hides & skins of animals, honey, etc.

Goods under Schedule 3

The list of goods which are taxed at the rate of 24 paise for every 1 rupee.

  • High speed diesel oil

The list of goods which are taxed at the rate of 26 paise for every 1 rupee.

  • Aviation and Jet fuel

  • Any motor spirit of other kinds

The list of goods which are taxed at the rate of 13 paise for every 1 rupee.

  • Gasoline for Aviation (duty paid)

  • Aviation turbine fuel (duty paid)

The list of goods which are taxed at the rate of 38 paise for every 1 rupee.

  • Aviation turbine fuel (bonded)

Registration for Gujarat VAT (Commercial Tax)

As mentioned above, all merchants who are in the business of trading goods & products, having an annual turnover of Rs. 5 lakhs and taxable turnover that exceeds Rs. 10000 in a financial year is liable to pay VAT compulsorily as per the VAT Act. They will need to register their business and the form used for registration is Form 101 along with the supporting documents to be provided to the registration authority.

Forms Required for Registration

  • Form No. 101: Used to register to pay VAT.

  • Form No. 101A: Used to declare any other places of business, branches or godown maintained in the State of Gujarat.

  • Form No. 101B: Used to declare places of business, branches or godowns that are located outside the state and will need to be accompanied by their TIN numbers.

  • Form No. 101C: This form informs the authority about the details of the person who is authorised to sign invoices, delivery challans, declarations, etc. A separate form is required for each person who has these privileges.

  • From No. 101D: Used to declare the people who are ultimately responsible for the business, such as directors and owners.

  • Form No. 101E: If the company is a manufacturer then this is the form that will be used to inform the authorities about the capacity.

  • Form No. 106: Used to provide information about managers within a business.

VAT Filing in the State of Gujarat

As per the goods and products that a merchant sells or purchases, accordingly the VAT has to be paid.

Monthly VAT Returns are to be filed by:

  • Dealers of Schedule III goods

  • Importers & Exporters

  • Dealers with more than Rs. 60,000 VAT payment in current or previous years

  • Dealers having remission or refunds under Section 40 or 41

  • Dealers who are exempt from VAT

  • Manufacturers or Sellers of SEZs

Quarterly VAT Returns are to be filed by:

  • Businesses who pay a lump sum tax (VAT)

  • Dealers with less than Rs. 60000 VAT

If the turnover for the financial year is less than Rs. 1 crore, an Annual Return of VAT needs to be filed by June 30th. For businesses who have a turnover of more than Rs. 1 crore, the Annual Return needs to be filed by December 31st.

Note: An exception is given to those dealers who fall under Schedule III of the VAT Act. All dealers whose goods fall under Schedule III need to pay their VAT within 12 days from the end of the month.

VAT Payment in Gujarat

VAT in Gujarat can be paid both offline and online, through the Gujarat commercial Tax website: commercialtax.gujarat.gov.in/vatwebsite/home/home.jsp

Steps for Online Payment

  • Visit the official website commercialtax.gujarat.gov.in/vatwebsite/home/home.jsp.

  • Fill in the requested details regarding the company, such as the address, phone number, email ID and the location where the firm is operating.

  • Confirm and submit the details when finished.

  • The page will successfully direct you to the bank page for online payment.

  • Post payment, you will receive an acknowledgement receipt which has a transaction ID and challan identification number.

Steps for Offline Payment

  • For this facility, an individual has to visit the VAT office with the requested form and documents and raise a ‘Counter Payment’ across the selected bank.

  • First you need to register online and file for VAT.

  • Post filing, a challan or pay-in slip is generated.

  • You can use this challan for making payments at specified banks.

  • All three documents, the acknowledgement received from the bank, from the commercial website for filing returns and also the pay-in slip generated online, need to be submitted to the respective office to complete the offline payment for VAT.

Frequently Asked Questions

What is Gujarat VAT (Commercial Tax)?

VAT (Value Added Tax) is a tax that is charged based on the category of goods sold. It is an indirect tax which replaced the general Sales Tax and is applicable on all goods and products sold in the state of Gujarat.

How can a merchant apply for registration in Gujarat?

All merchants have to register through the official website of the Department of Gujarat State Tax & Commercial Tax: commercialtax.gujarat.gov.in/vatwebsite/home/home.jsp.

What are ‘Schedules’ under the VAT act?

The rate of VAT is exercised on the basis of ‘Schedules’, a list of goods which can be subjected to tax, exempted from tax or treated under a different rate of interest. There are 3 such ‘schedules’.

Who is liable to pay VAT?

Any merchant who states a sale or purchase of minimum Rs. 5 lakhs is liable to pay VAT as per the VAT Act in the State of Gujarat.

How can a dealer make an e-payment?

For making an online payment, the dealer can visit the website commercialtax.gujarat.gov.in/vatwebsite/home/home.jsp. and select the tax period and other details post which they will be directed to the bank’s website. The payment can be made using netbanking and debit or credit cards.

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