VAT Registration in India Today
VAT registration is still required in India, but for a much narrower set of businesses than before. When GST replaced most indirect taxes on 1 July 2017, Value Added Tax was subsumed for almost everything, except for a few goods that were deliberately kept outside GST. Those goods — chiefly petroleum products and alcohol for human consumption — are still taxed under state VAT. So a petrol pump, a fuel distributor, an oil and gas company, or a liquor business still needs VAT registration, often alongside GST for the rest of what it sells.
N D Savla & Associates is a firm of Chartered Accountants in Mumbai that handles VAT registration and compliance for dealers in petroleum and alcohol, together with their GST and accounting.
Key point: GST did not abolish VAT; it narrowed it. VAT now applies mainly to petroleum products and alcohol for human consumption, which sit outside GST. A dealer in these goods still needs VAT registration, even though most other businesses moved entirely to GST in 2017.
VAT vs GST: Where Each Tax Applies
| Aspect | VAT | GST |
|---|
| Levied by | State governments | The Centre and states together |
| Applies to | Petroleum products and alcohol for human consumption, outside GST | Most other goods and services |
| Status | A legacy state tax, now residual | The main indirect tax since 1 July 2017 |
| Registration | Under the state VAT Act, for dealers in the excluded goods | Under the GST Act, for most businesses |
| Returns | Periodic VAT returns to the state | GST returns on the GST portal |
Who Needs VAT Registration Today?
| Business | Why |
|---|
| Petrol pumps and fuel dealers | They sell petrol and diesel, which are outside GST and taxed under VAT |
| Oil and gas companies and distributors | Crude oil, natural gas, and aviation turbine fuel remain under VAT |
| Liquor shops, bars, and distributors | Alcohol for human consumption is outside GST and taxed under state VAT |
| Breweries, wineries, and distilleries | The manufacture and sale of alcoholic beverages attract VAT |
| Dealers in other state-VAT goods | A few items may remain under state VAT depending on the state |
Both taxes often apply: Many of these businesses need both registrations. A petrol pump sells fuel under VAT but also lubricants and other items under GST, and a bar serves liquor under VAT but food under GST. In such cases, VAT registration and GST registration are both required, each for the goods it covers.
Documents Required for VAT Registration
- PAN of the business or proprietor.
- Certificate of incorporation, LLP agreement, or partnership deed, as applicable, with the MOA and AOA for a company.
- Proof of the place of business, and any licences relevant to fuel or liquor, such as the excise or fuel-retailing licence.
- Identity and address proof of the proprietor, partners, or directors, with photographs.
- Bank account details of the business.
A Worked Example
Suppose you are opening a petrol pump that will also sell lubricants, packaged snacks, and cold drinks:
- Fuel is under VAT. Petrol and diesel are outside GST, so you need VAT registration to sell them and to charge VAT.
- The other items are under GST. Lubricants, snacks, and drinks are GST goods, so you also need GST registration for them.
- Both registrations are obtained. You register under both the state VAT Act and GST, each covering its own goods.
- Returns run in parallel. You file VAT returns for the fuel and GST returns for the rest, keeping the two sets of records separate.
How We Help with VAT Registration
- Applicability check. We confirm whether VAT applies to your goods, in which state, and whether you also need GST registration.
- Document preparation. We assemble the PAN, incorporation, address, licence, and business details the application needs.
- Application filing. We file the VAT registration application on the state portal and follow it through to approval.
- Registration and set-up. We obtain your VAT registration and set up your records and tax rates.
- Returns and payment. We file your periodic VAT returns and ensure the tax is paid on time, alongside your GST.
- Ongoing compliance. We keep the VAT registration compliant, and handle amendments and the annual audit where it applies.
Common Mistakes
- Assuming GST replaced VAT entirely. VAT still applies to petroleum and alcohol, so dealers in those goods need VAT registration.
- Registering for only one of VAT or GST. A business selling both fuel and lubricants, or liquor and food, usually needs both.
- Missing the state-by-state requirement. VAT is a state tax, so a dealer operating in several states must register in each.
- Registering late. Operating without VAT registration where it is required attracts penalties.
- Not filing VAT returns. Even a small VAT liability carries periodic returns, and missing them attracts interest and penalty.
Related Services
Frequently Asked Questions
Is VAT still applicable after GST in India?
Yes. GST did not abolish VAT; it narrowed it. VAT now applies mainly to petroleum products (petrol, diesel, crude oil, natural gas, aviation turbine fuel) and alcohol for human consumption, which sit outside GST. Dealers in these goods still need VAT registration.
Who needs VAT registration in India today?
VAT registration is required by petrol pumps, fuel dealers, oil and gas companies, liquor shops, bars, distributors, breweries, wineries, and distilleries. Any business dealing in goods that still fall outside GST — primarily petroleum and alcohol — needs VAT registration.
Do I need both VAT and GST registration?
Often yes. Many businesses sell both VAT goods and GST goods. A petrol pump sells fuel under VAT but lubricants and other items under GST. A bar serves liquor under VAT but food under GST. In such cases, both registrations are required.
What is the difference between VAT and GST?
VAT is levied by state governments and now applies only to petroleum products and alcohol for human consumption. GST is levied jointly by the Centre and states and applies to most other goods and services. GST replaced VAT for the vast majority of goods and services from 1 July 2017.
What goods are still taxed under VAT?
Petroleum products including petrol, diesel, crude oil, natural gas, and aviation turbine fuel, and alcohol for human consumption including liquor, wine, beer, and spirits. A few other state-specific items may also remain under VAT.
Do VAT dealers still file separate returns?
Yes. VAT returns are separate from GST returns and are filed with the state tax authority. A business dealing in both VAT goods and GST goods runs two separate sets of returns in parallel, each for the goods it covers.