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Basics of MVAT -

MVAT or Maharashtra Value Added Taxwas started w.e.f. 1 st April, 2005

It is administered by Sales TaxDepartment under Finance Departmentof Mantralaya.

Based on the principal of VAT.

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Different businesses covered byMVAT -

VAT applies to all types of businessesincluding

(1)Importers

(2)Manufacturers(3)Distributors(4)Wholesalers

(5)Retailers(6)Works Contractors(7)Lessors

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Basic Methodology of MVAT -

All registered dealers, regardless of where they are in the chain ofmanufacture and production, must charge VAT on their sales of taxablegoods and collect it from their customers.Registered dealers must issue a tax invoice to other registered dealersshowing the VAT amount being charged as a separate amount.Registered dealers who pay VAT on their purchases can normally claim

a set -off for the VAT paid to their suppliers. As a result, VAT is not a cost to the dealers.Dealers must ensure that tax is charged separately in their purchaseinvoice in order to be eligible to claim set-off.Certain dealers who sell mainly to consumers at retail level can opt for asimplified system of VAT calculation and payment under a CompositionScheme.Under the Composition Scheme, dealers will not issue a tax invoice orshow VAT as a separate amount on a bill or cash memorandum.

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Obligations under MVAT -

Dealers who are required to be registered for VATmust

Charge and collect VAT on their sales of taxable goods

Issue proper tax invoicesKeep proper records and books of accountCalculate the VAT due to Government based on VAT chargedon sales LESS any VAT available as a set-off on businesspurchases

File VAT returns on a regular basis declaring their VAT liabilityPay any amount of VAT due to the Government with the VATreturn

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Rate of VAT -

Under the VAT, the tax rates have been simplified.

There are only two main rates of VAT 4% for items consisting mainly of raw materials used in themanufacturing process, IT products and some goods of commonconsumption12.5% for all goods unless they are listed under the other ratesFoodgrains including pulses, milk, vegetables and books are notsubject to VAT.

In addition, there are two other rates for specific items 1% for gold, silver, other precious metals, precious and semiprecious stones and their jewellery20% for liquor.

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Rates of MVAT -

A 0% Vegetables, eggs, milk otheressential itemsB 1% Precious Metals, PreciousStones and their JwellaryC 4% Raw Materials, Notified Industrialproducts, IT productsD 20% & above Liquor, petrol & dieselE 12.5% All remaining items

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Who should obtain registration -

Every dealer having turnover exceedingthe prescribed threshold limit, mustregister with the Sales Tax Department.However, there are provisions fordealers to register voluntarily.Further, If you are registered under theCentral Sales Tax Act, you must registerfor VAT, regardless of the threshold.

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Who are Dealers - contd..

A non resident dealer or as the case may be,an agent. residing in the State of a non-resident dealer, who buys or sells goods in theState for the purposes of or consequential tohis engagement in or in connection with orincidental to or in the course of, the business.

Any society, club or other association ofpersons which buys goods from, or sellsgoods to, its members;

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Exceptions to Dealer -

An agriculturist who sells exclusively agricultural produce grownon land cultivated by him personally, shall not be deemed to be adealer within the meaning of this clause.

An educational institution carrying on the activity ofmanufacturing, buying or selling goods, in the performance of itsfunctions for achieving its objects, shall not be deemed to be adealer within the meaning of this clause.

A transporter holding permit for transport vehicles (includingcranes) granted under the Motor Vehicles Act, 1988, which areused or adopted to be used for hire or reward shall not bedeemed to be a dealer within the meaning of this clause inrespect of sale or purchase of such transport vehicles or parts.components or accessories thereof.

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What is prescribed threshold limit -

The threshold is based on the total turnover of sales and the levelof taxable sales or purchases in a year commencing 1 April.The threshold limit above which you must register, depends onthe nature of your business.If your are an importer and your total turnover exceeds Rs.1,00,000 and your taxable sales or purchases exceed Rs.10,000in a year commencing 1st April, you must register and account fortax.If you are not an importer and your total turnover exceeds Rs5,00,000 and your taxable sales or purchases exceed Rs.10,000in a year commencing 1st April, you must register and account fortax.Importer for this purpose means a dealer who brings any goodsinto the state or to whom any goods are despatched from anyplace outside the state.

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Procedure for registration -

Application to be made in Form No. 101within 30 days of crossing the prescribedthreshold limit.

In case of change in ownership /constitution application within 30 days tobe made for new registration certificate.

In case of death of dealer, application fortransfer or succession of business to bemade within 60 days.

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Procedure for registration -

In case of dealer having more than one placeof business, single application for all places isto be made.Documents required

Two PhotographsRegistration feesBill wise statement of sales / purchasesProof of Address

Partnership Deed / MOA & AOA for Co.PAN ProofProof of Bank account etc.

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Records to be maintained underMVAT -

No special records have been mentioned forVAT.However, the records should be sufficient to

enable to complete VAT return, and tocalculate and account for VAT.Ideally, there must be records having details ofall the goods sold / disposed of and the VAT

charged, as well asDetails of all business purchases and the VATpaid on it.

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Tax Invoice -

A tax invoice can be in any form to suit business requirements.However, all tax invoices must show

the words `Tax Invoice in bold letters either at the top or at aprominent placea serial numberthe date of the transaction/sale/issuedescription of the goodsthe quantity or number of goods involved in the transactionthe price of the goodsthe amount of VAT charged on the goods (this must be shownseparately)a declaration certificatesuppliers name, address and Registration Certificate numbername and address of buyer

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Contents of declaration certificate -

The words on the certificate on the bill or cashmemorandum you issue should readI/We, hereby certify that my / our registration

certificate under the Maharashtra Value AddedTax Act, 2002 is in force on the date on whichsale of goods specified in this bill/ cashmemorandum is made by me / us and that thetransaction of sale covered by this bill / cashmemorandum has been effected by me and itshall be accounted for in the turnover of saleswhile filing my return.

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Returns under MVAT -

Monthly Return Dealer having tax liability of more thanRs. 10 Lacs in previous year orDealer having entitlement for refund of morethan Rs. 1 Crore during previous year andRetailer opting for Composition Scheme

Return to be filed within 21 days of nextmonth.

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Returns - contd..

Six Monthly Return Dealer having tax liability of Rs. 1 Lacs orless in previous year orEntitlement for refund is Rs. 10 Lacs or lessduring previous year

Quarterly Return others to file Quartely

return i.e. Liability of Rs. 1 to 10 Lacs orrefund from Rs. 10 Lacs to Rs. 100 Lacs

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Meaning of tax liability for return-

Tax liability refers to total of all taxespayable by him in respect of all hisplaces of business in the State underCentral Sales Tax Act, 1956 andMaharashtra Value Added Tax, 2002after adjustment of amount of set off or

refund claimed by him, if any underrespective act.

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First time dealers -

First time dealers to file QuarterlyReturns.First Return shall be from 1 st April till theend of respective quarter.From next year onwards depending uponthe tax liability for the first year Monthly /Quarterly or Half yearly returns shall befiled.

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Forms of Return -

Form No. 231 For dealers, other than

Composition dealersDealers executing works contractDealers engaged in right to use any goodsDealers under Package scheme of incentive

Form No. 232 Dealers opting for composition schemeexcluding works contractors / dealers optingcomposition for part business

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Forms of Return - contd..

Form No. 233 Dealers under composition for part businessWorks contractors

Dealers engaged in activity of transfer of right touse goods

Form No. 234 Dealers under Package Scheme of Incentive

Form No. 235 Notified oil companies