Value Added Tax
description
Transcript of Value Added Tax
Value Added Tax
Presented By :
Anand Sham Chandak.
BackgroundTo remove problems in old tax structure
of -Cascading effectDouble taxation of commoditiesMultiplicity of taxes
• Entry No.54 in List II (state list) of Schedule VII of constitution of India , empowers state levy tax on sale or purchase of goods other than news papers
CONSTITUTIONAL PROVISIONS
AT PRESENTAll states have adopted VAT All states have adopted VAT It has replaced Local Intra State taxes levied It has replaced Local Intra State taxes levied at state level E.g.. Local Sales Tax, Turnover at state level E.g.. Local Sales Tax, Turnover Tax, Additional Taxes and Surcharge Tax, Additional Taxes and Surcharge Central Sales Tax (CST) governing inter-state Central Sales Tax (CST) governing inter-state sales continues to be operational, but its rate sales continues to be operational, but its rate is 2% w. e .f. 01.04.2010is 2% w. e .f. 01.04.2010
Applicable
to ALL
“GOODS”
ELECTRICITY YES 1.MOVABLE2.CAPABLE OF ABSTRACTION & CONSUMPTION
STANDING TREES OR GROWING CROPS
YES IF SEVERED FROM EARTH UNDER TERMS OF SALE THEN IT IS MOVABLE HENCE GOODS
CANNED SOFTWARES
YES The moment copies are made and marketed , software become “goods” which can be capable of abstraction, consumption , and which can be transferred, delivered, stored and possessed. Hence, even if software is intangible it is Goods
NEWS PAPERS NO They are not goods but bundles of old newspapers sold as scrap or raddi are not sold as ‘newspapers’ and therefore, they are goods liable to VAT
WEEKLIES,JOURNALS, MAGAZINES
NO Weeklies , journals , magazines are at par with newspapers. Therefore, they are not goods
RECEIVABLES NO Receivables like debtors, bills of exchange are actionable claims, which are specifically excluded from the ambit of ‘goods’
LOTTERY TICKETS
NO Lottery tickets represents right to participate in lottery and a chance to win therein. Hence, it is an actionable claims and not ‘goods’
SIM CARDS NO If the SIM card is incidental to the provision of services, VAT can not be imposed thereon
SALES Any Transfer of property in goods by one person to another for cash or deferred payment or any other valuable
consideration
TURNOVERMeans
aggregate of sales
price received or receivable by a dealer
Input Tax creditmeans setting-off the input tax paid by a registered dealer against the amount of output tax payable by
him
Only to a registered dealerOnly on intra-state purchases Central sales tax paid on inter state purchases is not allowed as input tax credit
Only if purchased from registered dealerSet off against : 1] VAT on intra-state sales2] CST on inter-state sales
LETS UNDERSTAND LOGIC BEHIND ALLOWING VAT CREDIT AGAINST PAYMENT OF CST AND ALLOWING
CREDIT OF CST
DEALER IN PUNESTATE OF MAHARASHTRA
DEALER IN BANGALORESTATE OF KARNATAKA
INTER STATE SALES TO STATE OF MAHARASHTRA
1.CST ON SALES IS COLLECTED BY STATE OF KARNATAKA2.NO CREDIT OF CST ON PURCHASES MADE BY DEALER OF BANGALORE ALLOWED TO THE DEALER OF PUNE3.DEALER IN BANGALORE CAN USE THE INPUT TAX CREDIT AGAINST PAYMENT OF CST OF INTER STATE SALES
Non Availability of Input tax credit for set off
Inter state purchasesStock Transfer : 2% disallowedInputs consumed for personal purposeInputs used for manufacture of exempted goods Inputs used for exported goods , if it is not refunded
Computation of VAT liability or Refund
• As explained in the excel sheet and print out given to you
After registration
procedure , every dealer shall
be allotted TIN no.
TIN (Taxpayer`s identification
number ) is a 11 digit
numerical code which is
intended to identify a tax
payerTIN will facilitate computer
applications, such as
detecting stop filers and
delinquent accounts.
TIN is required to be stated
on each invoice, hence , Tin
will help cross check
information on tax payer
compliance, for example , the
selective cross-checking of
sales and purchases among
VAT taxpayers
Registration procedure
• Application of registration is required to be made in
prescribed form along with prescribed security to the
commissioner or any other specified authority
Documents to be attached :Address proof 1. Place of business 2. Place of residenceNon refundable Fees 1. Voluntary Reg. : Rs 5000 2. Mandatory Reg.: Rs 500Deposit of Rs 25000 only in case of voluntary registrationConstitution of business e.g. Partnership deed, Articles & Memorandum of AssociationShop Act numberProfession Tax numberPhotos (2)Bank Account details along with a cancelled chequePAN CARD.
Sample image
of RegistrationCertificate
Audit of a Sale invoice
Points to be checked : “Tax Invoice” Date Name of the Customer with
address of delivery Particulars Separate disclosure of VAT rates
and Amount Issuing dealer`s VAT TIN No. and
declaration Authorised Signatory
Applicability of VAT rates
SCHEDULE A : EXEMPTED GOODS
SCHEDULE B : Goods with 1% VAT rate
SCHEDULE C : Goods with 4% VAT rate
SCHEDULE D : Goods with 20% VAT rate
SCHEDULE E : Goods with 12.5% VAT rate
Audit of a Purchase invoice
Points to be checked : “Tax Invoice” Date Name of the Supplier
with address of issuance Particulars Separate disclosure of
VAT rates and Amount Issuing dealer`s VAT TIN
No. and declaration Authorised Signatory
Date of Payment and return submission
• Under M-VAT the payment is needed to be made before 21st of the following month of the respective month/quarter/six months.
• The return has also to be furnished within 30 days of the following month/quarter/six months in e-form.
• The return are furnished in form no. 231/232/233/234/235 as per the registration of dealer.
• In case of late payment, simple interest of 1.25% per month is payable on outstanding amount.
Explanations of
E-forms
• Form No 231• Form for CST : Form No
III E• Form for C form
application• Form No 704 for VAT
Audit
STATISTICS
NAME OF ACT NO. OF REGISTERED
DEALERSMVAT ACT 708167CST ACT 549404LUXURY TAX ACT 4195ENTRY TAX ACT 817PTEC 1961295PTRC 255778SUGARCANE P.T. ACT 397
Current progress in VATCurrent progress in VATWhole VAT department is electronisedVAT Audit limit is increased to Rs. 60 LacsVAT Audit can done by CWA and CAPenalty for not filing VAT audit report in form No.704 is 1% total turn overFirst time penalty is introduced for incorrect filing of particulars in VAT audit reportWorks contract and related TDS issues [ 2% if registered dealer and 4% if non registered dealer ]Concept of wine and liqueur is separated