Value Added Tax (VAT) is a form of sales tax. It is collected in stages on transactions Involving sales of goods. Tax paid on purchases (input tax) is rebated against tax payable on sales (output tax). VAT is levied on sales of all taxable goods. VAT is not levied if sales of goods are not made in the course of or in furtherance of business.

An individual, partnership, company etc., who sells goods in the course of business and who is registered or is required to register for VAT should pay VAT.

VAT is chargeable if the sales of goods:

	are made in the State of Telangana
	are made by a VAT dealer in the State
	are made in the course of or in furtherance of a business; and
	are not specifically exempt or zero-rated.

Sales of goods made in / or from the State of Telangana, which are not exempt, are taxable sales.
e.g., Sale of exempt goods (Schedule I) is not a taxable sale.
  
Sales are outside the scope of VAT if they are

	made by someone who is not a VAT dealer; or
	not made in the course of or in furtherance of business.

Pl note that Taxable sales also include ZERO-RATED sales ( For.e.g, Exports or Interstate sale)

Other than your normal business sales, you should also account for VAT on the Following sales:

a	Sales to your staff or sales from vending machines;
b	Sales of business assets (e.g. Equipment, furniture, commercial vehicles);
c	Sales under Hire-purchase agreement or lease of goods to someone else;
d	Works contracts

Apart from taxable sales, there are sales that the Value Added Tax Act, 2005 specifies as exempt.

With both zero-rated sales and exempt sales you don't charge VAT.
However, for zero-rated sales you are eligible to claim a tax credit for the input tax paid on your purchases;

(Example: If a dealer is making exports, he is eligible to claim Input tax on purchases made within the state, subject to conditions)
  
Whereas for exempt sales you are not eligible to claim a tax credit for the input tax paid on your purchases relating to such exempt sales.
  

It is the VAT chargeable on all the taxable sales made by a VAT dealer.

It is VAT charged on your purchases of goods. If you are registered for VAT you can normally claim a credit for the VAT charged on most business purchases.

Taxable turnover is the aggregate total of sale prices of all taxable goods including goods taxable at zero rate. Sale price of goods and transactions exempted and VAT charged on taxable sales do not form part of Taxable Turnover.

Such transactions are exempt from VAT liability, but you are eligible to claim an input tax credit for the tax paid in excess of 4% on inputs.In inputs are purchased at 4 % Vat, then you are not eligible to claim ITC for this amount.

	Sole Proprietor
	Partnership
	Private Company
	Public Company
	Government Enterprise
	Club, Society or Association
	Hindu undivided family

The term "any dealer" for the purposes of VAT registration includes: