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PRESENTATION

ON
VALUE ADDED TAX

-By Nirav D. Kowale B. Com III

WHAT IS VAT?

VAT is a multi-point tax collected at


every stage
VAT is arrived at by deducing the tax
paid on purchases from the tax payable
on sales

WHY VAT?

To have uniform rate of tax throughout


the
country
To abolish deferral/waiver/incentives
To abolish internal check posts
To facilitate self assessment
To reorganize commercial tax
departments and enable
computerization

CONCEPT OF VAT

Essence of VAT is providing set-off for


the tax paid earlier, given effect
through the concept of input tax
credit/rebate
VAT is based on the value addition to
the goods, and the related VAT liability
of the dealer is calculated by deducting
input tax credit from tax collected on
sales during the payment period (say, a
month).

ADVANTAGES

Rationalized Tax Structure:1% , 4%, and 12.5%


Simple:Minimum exemptions with lesser rate and refund
procedures.
Transparent:Being a consumption tax, more transparency
is maintained
Bigger Opportunities:By giving tax credits, the
manufacturing cost will be less and even bigger enterprises
will establish their presence in Tamil Nadu.
Reduced Prices of Goods:Elimination of tax cascading
and pyramiding effects
Growth:Creates more job opportunities in the state.
tax Compliance:Checks tax evasion

VAT IMPLEMENTATION

Year 2005:22 states implemented


Year 2006:6 states have implemented
Year 2007:Remaining states have
implemented
Status in Tamil Nadu:
July 22, 2006: Finance Minister of Tamil
Nadu announced in the state assembly
about the introduction of VAT system
October 28, 2006: VAT Act was published in
gazette from 1/1/2007

SCHEDULES

VATable Goods)
Part A - Bullion, Gold, Silver (taxable @ 1%)
Part B - Taxable @ 4% (150 items)
Part C Taxable @ 12.5% (69 items) W.E.F
12.07.2007
Non-VATable (12 items
Compounding Schemes for Hotels, Restaurants
& Sweet Stall
Exempted Goods (Section 15
zero Rate Sale International Organization

CAPITAL GOODS

ITC eligible for purchase of capital


goods
used for the manufacture of taxable
goods
Eligibility: From the date of
commencement of commercial
production
50% can be adjusted in the first year,
balance 50% in the second and third
year

RETURNS

Every Dealer should file monthly return


in Form I disclosing the input tax paid
and output tax payable by 20thof the
following month

Details of TIN should be furnished on


both purchase and sales
Separate Forms J, K, L, M are meant for
various categories of dealers

THAKING YOU