VALUE ADDED TAX
- Value added tax.
- One of the types of sales tax system.
- Simple, Easy with lesser tax rates.
- It is calculated by deducting tax paid on purchases from tax payable on sales.
- 1% - Jewellery, Bullion, Gold & Silver articles.
- 4% - Industrial inputs, Capital goods & other Consumable goods.
- 12.5% - other items not specified above.
- Alcohol, Sugarcane, Petroleum products etc.
REGISTRATION OF A DEALER
- Firms, Manufacturing units, Hotels, Contractors – registration compulsory after reaching turnover of 5 lakhs.
- Other traders - after reaching turnover of 10 lakhs.
For the following Dealers no turnover limit & should pay tax at their actual turnover. (Registration compulsory before
1 day of commencement of business)
- Casual traders
- Outstate parties.
- Consignment agent
Principal place of business - Rs.500
Branch - Rs.50
No Security deposit needed.
Renewal not necessary.
(ITC- INPUT TAX CREDIT)
- Input Tax Credit (ITC) method.
- Compound rate method.
INPUT TAX CREDIT METHOD
CALCULATION OF VAT ( under ITC Method)
Total tax payable on sales : xxxx
less: Tax on sales returns : xxxx
OUTPUT TAX PAYABLE : XXXX
Total ITC available on purchases : xxxx
Less: ITC on purchase returns : xxxx
Less: Reversal of ITC : xxxx
ITC PAYABLE : XXXX
VAT PAYABLE: OUTPUT TAX PAYABLE less ITC PAID.
COMPOUND RATE METHOD
OPTION FOR FOLLOWING DEALERS ONLY
1. HOTELS & RESTAURANTS:
- 10 to 25 lakhs - Rs. 12000
- 25 to 30 lakhs - Rs. 24000
- 30 to 40 lakhs - Rs. 36000
- 40 to 50 lakhs - Rs. 48000
2. WORKS CONTRACT:
- Civil Works Contract - 2%
- Civil Works Maintenance - 2%
- Other Contractors - 4%
3. SMALL TRADERS UPTO 50 LAKHS:
- First schedule Part A - 1%
- First schedule Part B - 4%.
- Others - 12.5%
NO INPUT TAX CREDIT IN THE FOLLOWING CIRCUMSTANCES
- Unregistered dealers.
- No purchase bills.
- Goods used for personal use.
- Free gifts, samples.
- Goods destroyed in transit.
- Exempted goods.
- Interstate purchases, consignment.
REVERSAL OF INPUT TAX CREDIT
- Purchase Returns.
- Unfructified Sales.
- Bogus Bills, No Bills.
- Free Samples, Personal Use
- Raw Materials destroyed in Manufacturing
- Taxable goods subsequently declared as exempted.
- Interstate, Consignment and stock transfer of goods against declaration forms. (Calculated at assumed
rate of 4%)
- Sellers registration cancelled prior to date of sale
- Sales against C - Form – 2%
- Without C - form - Local Tax Rate (VAT)
- F - Form - 0%
- Without F - form - Local Tax Rate (VAT)
ZERO RATED SALES
- Export sales.
- Goods sold to SEZ.
ITC can be claimed as refund.
- Goods exempted.
- Goods sold to certain institutions.
NO TAX ON PURCHASES, NO TAX ON SALES AND THEREFORE NO ITC.
- Self assessment
- 20% of the cases are randomly selected for assessment
- Return filed without payment of tax (or) delay in filing exceeding 10 days – 15% interest charged on tax
(for a year)
- Interest can be claimed from department on refund at ½ % in delay exceeding 90 days.
ITC ON CAPITAL GOODS
- Capital goods Purchased within State -> Maximum ITC -> 4%
- 1st Year - 50% of ITC can be adjusted
- 2nd Year - 25% of ITC can be adjusted
- 3rd Year - 25% of ITC can be adjusted