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Value Added Tax

Value Added Tax. Presented By : Anand Sham Chandak. Background Concepts Certain Definitions Procedures for registration VAT Audit Current progress Queries time. Background To remove problems in old tax structure of - Cascading effect Double taxation of commodities

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Value Added Tax

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  1. Value Added Tax Presented By : Anand Sham Chandak.

  2. Background • Concepts • Certain Definitions • Procedures for • registration • VAT Audit • Current progress • Queries time

  3. Background To remove problems in old tax structure of - • Cascading effect • Double taxation of commodities • Multiplicity of taxes

  4. CONSTITUTIONAL PROVISIONS • 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

  5. AT PRESENT • All states have adopted VAT • It has replaced Local Intra State taxes levied at state level E.g.. Local Sales Tax, Turnover Tax, Additional Taxes and Surcharge • Central Sales Tax (CST) governing inter-state sales continues to be operational, but its rate is 2% w. e .f. 01.04.2010

  6. Applicable to ALL“GOODS”

  7. SALESAny Transfer of property in goods by one person to another for cash or deferred payment or any other valuable consideration

  8. TURNOVER Means aggregate of sales price received or receivable by a dealer

  9. 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 dealer • Only on intra-state purchases Central sales tax paid on inter state purchases is not allowed as input tax credit • Only if purchased from registered dealer • Set off against : 1] VAT on intra-state sales 2] CST on inter-state sales

  10. LETS UNDERSTAND LOGIC BEHIND ALLOWING VAT CREDIT AGAINST PAYMENT OF CST AND ALLOWING CREDIT OF CST INTER STATE SALES TO STATE OF MAHARASHTRA 1.CST ON SALES IS COLLECTED BY STATE OF KARNATAKA 2.NO CREDIT OF CST ON PURCHASES MADE BY DEALER OF BANGALORE ALLOWED TO THE DEALER OF PUNE 3.DEALER IN BANGALORE CAN USE THE INPUT TAX CREDIT AGAINST PAYMENT OF CST OF INTER STATE SALES DEALER IN BANGALORE STATE OF KARNATAKA DEALER IN PUNE STATE OF MAHARASHTRA

  11. Non Availability of Input tax credit for set off • Inter state purchases • Stock Transfer : 2% disallowed • Inputs consumed for personal purpose • Inputs used for manufacture of exempted goods • Inputs used for exported goods , if it is not refunded

  12. Computation of VAT liability or Refund • As explained in the excel sheet and print out given to you

  13. 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 payer • TIN 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

  14. Registration procedure • Documents to be attached : • Address proof 1. Place of business 2. Place of residence • Non refundable Fees 1. Voluntary Reg. : Rs 5000 2. Mandatory Reg.: Rs 500 • Deposit of Rs 25000 only in case of voluntary registration • Constitution of business e.g. Partnership deed, Articles & Memorandum of Association • Shop Act number • Profession Tax number • Photos (2) • Bank Account details along with a cancelled cheque • PAN CARD. • Application of registration is required to be made in prescribed form along with prescribed security to the commissioner or any other specified authority

  15. Sample image of RegistrationCertificate

  16. 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

  17. 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

  18. 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

  19. 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.

  20. 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

  21. STATISTICS

  22. Current progress in VAT • Whole VAT department is electronised • VAT Audit limit is increased to Rs. 60 Lacs • VAT Audit can done by CWA and CA • Penalty for not filing VAT audit report in form No.704 is 1% total turn over • First time penalty is introduced for incorrect filing of particulars in VAT audit report • Works contract and related TDS issues [ 2% if registered dealer and 4% if non registered dealer ] • Concept of wine and liqueur is separated

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