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Vat

Vat

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Published by Gautam Jayasurya

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Published by: Gautam Jayasurya on May 23, 2012
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05/23/2012

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Three things are important in tax
1. Taxable item2. Taxable event3. Taxable entity
Value Added Tax
1. Sale/purchase value of the goods/commodities. Each state has its own VAT act. There areschedules at the end of each act which enlist the taxable items and the slab rate fortaxation.2. The point of sale or purchase. Sale point or purchase point of the transaction.3. Legal persons doing business. The business is of taxable item beyond the threshold limit.The threshold limit depends on the nature of activity undertaken. For ex. If the seller is atrader then it is Rs. 5,00,000 but if he is a manufacturer then it is Rs. 1,00,000 and if he isan importer than Re. 1
What is VAT
1. Power to levy is with state list
 – 
imposed on value addition made to the commodity by thetaxable entity.2. Different from CST (Central Sales Tax)
 – 
where movement of goods from seller topurchaser
terminates
in the state itself VAT is imposed, whereas if the movement of goods
terminates
in other state within India then CST is imposed.3. There can be interstate sale in the state and the CST shall apply.4. Under the GST regime the VAT shall be abolished.
Registration Provisions
Every taxable entity dealing with the taxable item within a prescribed period of time.
Liability for Non-Registration
Penalty to the tune of 200% of VAT payable.
 
 
WHAT IS SERVICE TAX.
Service tax is a tax levied on the services. Service tax is on intangible items.Works contract is one where both goods and services are consumed, rather a mixed form of contract.
They are indivisible contracts comprising of both tangible and intangible contracts.
Power to levy service tax is with the Union Government under the Finance Act, 1994.
 Position Under GST
 
1. GST won’t differentiate b/w tangible and intan
gible.2. A lump-sum to be charged on the revenue.3. Power to levy with both Central and State Government.4. The department of service tax and VAT shall merge, leading to a simplification of processand system.5. GST will lead to an end of Service tax.
Charging Provision
Sec. 65 & 66 of the Finance Act, 1994 is the charging provision. They provide a complete listof services on which the tax is levied.Under GST also and there is a provision of an amendment to Finance Act, 1994 to do awaywith the inclusive list. Which will remove the bottlenecks of the classification of taxableservices.Rather a blanket provision has been proposed with the provisions for certain exclusionaryclauses.
Taxable item
Services are the taxable items for the service tax, provided in Sec 65 & 66 of the Finance Act,1994.
Taxable event
Raising of the bill or the payment whichever is earlier.
Taxable entity
Service provider earning revenue beyond the threshold limit of Rs. 10,00,000.
Registration
Sec 69 read with Rule 4. There is prescribed performa which has to be furnished to theservice tax department alongwith the supporting documents and the prescribed fee.
 
 
Supporting documents
1. Id proof 2. Address proof 3. Treasury challan
Penalty for Non-Registration
There is no certain provision for the penalty for the Non-Registration. Can be called dubious.
CENTRAL EXCISE ACTTaxable item
Goods produced/manufactured which is excisable.
 Taxable event
Manufacturing or producing but collection is delayed till the removal of goods from thefactory. The dispute is mainly because of clandestine movement of goods.
 Taxable entity
The producer or the manufacturer except the in the SEZ.
 What is Central Excise
Central excise is Tax levied on the goods, which are manufactured/produced by the excisableunits.
Power to levy Central Excise
With the Union Government except for Alcohol Beverages which resides with the StateGovernment.
Difference B/w Central Excise, VAT & Customs Act
All these taxes are levied on goods and commodities, but there is a difference between thetaxable events. In Vat it is Sale Point which is taxable, in Central excise it is themanufacturing or Production point and in the Customs Act it is the Import/export point istaxable.
Position in GST
The Central Excise shall be rendered inoperative in the GST regime.

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