Page 248 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Unit 14: Value Added Tax

Cancellation of Registration Notes

The registration can be cancelled on:
(i) Discontinuance of business; or
(ii) Disposal of business; or

(iii) Transfer of business to a new location; or
(iv) Annual turnover of a manufacturer or a trader dealing in designated goods or services
falling below the specified amount.
Tax Payer's Identification Number (TIN)

TIN (Tax Payer's Identification Number) is a code to identify a tax payer. It is the registration
number of the dealer. The taxpayer's identification number will consist of 11 digit numerals
throughout the country. First two characters will represent the State code as used by the Union
Ministry of Home Affairs. The set-up of the next nine characters will be, however, different in
different States. TIN will facilitate computer applications, such as detecting stop filers and
delinquent accounts. TIN will help cross-check information on tax payer compliance, for example,
the selective cross-checking of sales and purchases among VAT taxpayers.

VAT Invoice

Invoice is a document listing goods sold with price, tax charged and other details as may be
prescribed and issued by a dealer authorized under the Act.
The whole structure of the VAT with input tax credit is founded on the documentation of a tax
invoice, a cash memo or a bill. The White Paper mainly provides for the following provisions,
which are mandatory, and failure to comply with these attracts penalty:
(i) Every registered dealer whose turnover of sales exceeds the specified amount shall issue
to the purchaser a serially numbered tax invoice, cash memo or bill with the prescribed
particulars.
(ii) The tax invoice shall be dated and signed by the dealer or his regular employee, showing
the required particulars.
(iii) The dealer shall keep a counterfoil or duplicate of such tax invoice duly signed and dated.

Importance of VAT Invoice (Tax Invoice)

Invoices are crucial documents for administering VAT. In the absence of invoices VAT paid by
the dealer earlier cannot be claimed as set off. Invoices should be preserved with full care. In case
any original invoice is lost or misplaced, a duplicate authenticated copy must be obtained from
the issuing dealer.
A VAT invoice:
(i) helps in determining the input tax credit;

(ii) prevents cascading effect of taxes;
(iii) facilitates multi-point taxation on the value addition;
(iv) promotes assurance of invoices;

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