CONCEPT OF VALUE ADDED TAX(VAT)

SUBMITED TO:- Dr.K.N.CHAWDA

Centre of M.Phill:- Veer Narmad South Gujarat Uni.

PRESENTED BY:-

ANKITA JARIWALA(09)

DEFINATION Of VAT

Multi-point sales tax on sale or purchase goods or services.

Collected on value addition at each stage.

VAT is a multi-stage tax levied at each stage of the value addition chain with a provision to allow Input Tax Credit (ITC) on tax paid at an earlier stage which can be appropriated against the VAT liability on subsequent sale.

India has agreed to launch Value Added Tax (VAT) from 1st April 2005 with two basic rates of 10% & 12.5%

CALCULATION Through example

Input purchased in the month Rs.200000/-

Output sold in the month(208000+42000)

Rs.250000/-

Suppose input tax paid @ 4% (200000*4%)

Rs.8000/-

Suppose output tax paid @12.5% (250000*12.5%)

Rs.31250

VAT payable during the month after adjustment of input tax credit(31250-8000)

Rs.23250

Total tax collected by GOVT. Rs.31250

At the time of purchase Rs.8000

At the time of sale Rs.23250

DIFFERENCE VAT Tax levied and collected

at every point of sale. It is transparent & easier

VAT dispenses with so many forms.

Returns & Challan will be filled together.

Scrutinity of return is less difficult.

Few forms are required

2 taxation rates mostly Self assessment by

dealer. Penalties will be stricter

SALES TAX It is not levied at every stage

of sale. Computation of tax liability is

complex. There is a misuse of forms

resulting in tax evasion. Return & Challan are filled

separately. Scrutinity of returns is

comparatively more difficult. Huge number of forms

required. Many taxation rates. Assessment done by the

department. Penalties are less stricter.

IMPORTANCE OF VAT More equitable:- tax burden shared by all dealers. More transparent:- Easy procedures & only 2 rates. Simpler:- Easy computation & easy compliance Credit for input taxation:- cost efficiency Better compliance:- Through self policing Prevents cascading effect:- Through input rebate Avoids distroitation in trade & economy:- Uniform tax

rates.

GUJARAT VALUE ADDED TAX Gujarat Value Added tax (GVAT) was come into force

from 1st April 2006 From its execution this act was amended several

times. Last amendment was introduced on 31-07-2009.

CONCEPTS OF GVAT Following definitions

are given by GVAT_2003

Agriculture Business Capital goods Central act Commission agent Dealer Earlier law Goods HSN code Manufacture Person Place of business

Purchase price Raw material Registered dealer Resale Sale & Sale price Tax & Tax period Taxable goods & turnover Turnover of purchase & sale Total turnover Value of goods Year Zero rated tax

THE DEALER “Dealer means a person who carries on, in the course of his

business activity to buy, to manufacture, to sell , to supply or to distribute goods for consideration in cash or by way of differed payment or commission, remuneration or otherwise.

Dealer Includes The Following:-A. The central & state govt., any local & statutory authority, A

company, A partnership firm, A Hindu Undivided family Or any society, club, association or body incorporated or not which carries on business.

B. A casual dealerC. An auctioneerD. A factor, broker, commission agent, delcreder agent or

mercantile agent.E. A person who transfers property in goods otherwise than in

purchase of contract is a dealer

CONTINUE……F. A person who transfers property in goods involved in

execution of work contract. G. A person who delivers goods on Hire purchase or on

installment payment.H. A person who transfers the right to use any goods.

CONTINUE….

Deemed As Dealer

A society, club, firm or an association

The central or state govt., or a local or any statutory authority

Any person or body which disposes any goods.

Not Deemed As Dealer

An agriculturist who sells exclusively agriculture goods

An individual who sells exclusively fish or any sea food.

A charitable, religious or educational institution

CONCLUSION

VAT is introduced in India in order to minimize trade barriers, to make accounts more transparent & to maximizes revenues.

From its introduction, many amendments are take place. Recently on 31-07-09 GVAT was amended which was effected from 1-08-2009

Over the time, It was decided that the VAT rates would be merged into one uniform rate & Central State Tax (CST) will be phased out.

BIBLIOGRAPHY

LATE R.P.SHAH & C.A.ATUL. R. SHAHThe Gujarat Value Added Tax Act 2003By the tax publications AHMEDABAD.

WWW.gujaratsalestax.gov.in/vatgujarat. html

THANK YOU