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VAT is a multi point levy where the tax paid on local purchases from the registered dealer can be set off against the tax payable on the sale of goods, other than special goods.
2.The main benefit of VAT is:
• Reduces tax evasion. • Put an end to multiple taxes such as turnover tax, surcharge on sales tax, additional surcharge etc. Thus, avoiding cascading effect. • Advocated an internal system of self assessment for VAT liability. • Tax structure becomes easier and more visible. • Enhances tax compliance and results in higher revenue growth. • Encourages competitiveness of exports
3. VAT replaces the following : • • • • General Sales Tax Resale Tax Surcharge Additional Sales Tax
HOWEVER, the following still continues: • • The Central Sales Tax Act, 1956 regulating the inter-state transactions of sale and purchase The Entry Tax
4. Rates of tax under VAT • • • • 1% 4% on goods eligible for input tax credit. 12.5% on goods eligible for input tax credit. ZERO rate
works contract. restaurants and sweet stalls). Company. Railway Administration. The VAT Act includes: • • Local authority. Any person holding permit for transport vehicles Tamil Nadu State Road Transport Corporation Customs Department.• Special rate of tax on certain goods (which are kept out of VAT) – No input tax credit is allowable on these goods – example: Petrol Dealers under VAT A dealer is a person who purchases. delcredere agent. supplies or distributes the goods in the course of his business for valuable consideration. Transport and Construction Companies. Shipping. Port Trust. Firm Casual trader. Advertising Agencies Corporation or Companies of State and Central Governments • • • • • • • • REGISTRATION • Those dealers whose total turnover in respect of purchase and sales in the State is not less than Rs. hotels. Association of persons. Hindu undivided family. sells. Insurance Company. auctioneer. commission agent. local branch of the firm or company situated outside the State Person who effects transfer of property in goods other than by way of sale dealer in hire purchase. . Air Transport Corporation and Airlines.. person who transfers right to use the goods Dealer in eatables including food and drinks (ie.10 lakhs for a year are to get registered under the Act. factor.
REGISTRATION CERTIFICATE:• • • • • • • • • • • • • • Application in Form A Copy of Pan Card issued by Income tax Dept. depots) No Security deposit. Two passport size photograph of applicant(s) Self attested – sufficiently stamped envelop Address proof Lease agreement of the premises (if taken for lease) Partnership deed (in case of partnership firm) Details of Partners in Form B (in case of partnership firm) Memorandum and Articles of Association ( for Companies registered under the Indian Companies Act.for principal place of business An additional fee of Rs. documents and correspondence LEVY OF TAXES: . Agent of non. Casual Traders. Registration fee of Rs.resident dealers and dealers in Jewellery shall obtain Registration Certificate irrespective of their quantum of turnover. 500/.• • The other dealers whose total turnover for a year is not less than Rs. It is permanent till it is cancelled by the dealer on stoppage of business OR cancelled by the Department on other grounds There is no renewal of registration REGISTERING AUTHORITY:• Head of the Assessment circle in whose jurisdiction the dealer’s principal place of business is situated.5 lakhs shall get registered. TIN (TAX PAYER IDENTIFICATION NUMBER): • • The Registration Number allotted to the dealer is known as TIN This is a eleven digit number to be quoted in all VAT Transactions. 50/.for each additional place of business (godowns.
• • • • • • On sale of goods On right to use any goods On transfer of goods involved in a works contract On food and drinks On bullion and jewellery On purchase of goods (in certain cases as purchase tax) EXEMPTED SALE:• Sale on which no tax is levied. 50 lakhs No input tax credit. sale to exporters in other states) Sale to International Organisations Sale to customers in Special Economic Zones COMPOUNDING SYSTEM OF TAX • • • • • • • The rate is not exceeding 1% as notified by Government on the turnover The effective rate notified by Government is 0. Hotels.e. Applicable to dealers (whose total turnover for a year is less than Rs. and no Input Tax Credit is allowed ZERO RATE SALE:• • • • • Sale on which no tax is levied but the tax paid on local purchases is refunded to dealer who effected such sale. 10 lakhs but not more than Rs.5% It is optional. To maintain purchase and sales accounts only WORKS CONTRACT TAX • • • Works Contractors may opt to pay at compounded rate at 2% for civil works and at 4% on others It is payable on the total contract value No input tax credit . restaurants and sweet stalls where total turnover is not less than Rs. 50%) who effects second and subsequent sale within the state. 1956 (i. Export sale (by self or to others within the state) Sale in the course of Export under CST Act.
• • Accounts to be maintained for the contracts and the amount received against such contract. 200 crores in the preceding year – before 20th of succeeding month Due date for dealers whose turnover is Two hundred crores and above in the preceding year – before 12th of succeeding month Details of purchases and sales effected On line filing Return shall be accompanied with proof of payment of tax MODE OF PAYMENT OF TAX:• • By remittance into State Bank of India or any other bank authorised by Government from time to time (or) By remittance in cash into a Government Treasury or to the assessing authority or other officer empowered to make the demand or authorized to make collection (or) By means of a crossed cheque in favour of the assessing authority drawn on any one the banks situated within the city / town where office of the assessing authority is situated (or) By means of a crossed demand draft / banker cheque drawn in favour of the assessing authority (or) By any other mod as authorized by the Government from time to time. • • • . (separate account for each contract) The tax to be deducted at source by the person awarding the contract ACCOUNTS TO BE MAINTAINED BY DEALERS:• Rule 6 of The Tamil Nadu Valud Added Tax Rules. 2007 prescribes the various documents to be maintained by every dealer FILING OF RETURNS:• • • • • • Return to be filed in the prescribed forms Due date for dealers whose turnover is below Rs.
These inputs may be meant for re-sale as such OR for use in manufacture. which shoud contain details of sale such as “Name of the seller. After check. Quantity sold. address and his TIN . INDUSTRIAL INPUT – “Those goods which are notified by Government AND generally go into manufacture of other goods and they are taxable at 4% Vat rate. INPUT TAX CREDIT:• The tax paid on the goods purchased can be adjusted against the tax payable on the goods sold subject to conditions stipulated in the Act / Rules. OUT PUT TAX ‘ “ Tax collected on sale of goods from the buyer.ASSESSMENT:• • • • • • Self – assessment. name and address of the purchaser with his TIN.” • • • • • • . Value of such goods. Input means “All purchases by a dealer in the course of his business. The output tax is calculated by applying the rate of tax on taxable turnover of the goods. process of other goods OR for packing of goods manufactured. The Department accepts the returns filed The dealers need not appear before assessing authority or produce the accounts for annual assessment Assessment Order by the authority based on the returns filed. including capital goods. OUT PUT – “Sale of goods made by a registered dealer to other registered dealers and consumers in the course of his business. tax rate and the amount of tax charged separately. the authority either accept and confirm the self assessment or revise the assessment. Detailed scrutiny by the Assessing Authority at random ( 20% of the total assessment will be selected for scrutiny) The details of such selection for scrutiny shall be placed on notice board in the assessment circle and in the department website. The accounts which are selected for detailed check shall be called and checked by the assessing authority. TAX INVOICE – “ Invoice OR Bill. Description of goods sold.
2006. partner and director (d) Goods damanged in transit. They are given in details under TNVAT Act. No input credit is available on sale where tax is paid on compounding rate. There are certain restrictions and conditions on eligibility of input tax credit. Input tax credit includes the purchase tax paid under Section 12 of the VAT Act.. lost or stolen (f) Inter state sale without support of Form 'C' (g) Stock transfer to depots in other states for sale without support of Form 'F' (h) Sales returns / Purchase returns (i) Purchase from un-registered dealers • • • • • • • • • • . INPUT TAX CREDIT – “It is an aggregate total amount of tax paid by a registered dealer on the total purchases made by him within the state from other registered dealers (for a particular period). Input tax credut shall be claimed only on the basis of original purchase tax invoice issued by registered selling dealer. The input tax can be adjusted against the tax payable by the purchasing dealer on his sales. If the original invoice is lost. (e) Goods destroyed. There are certain restrictions and conditions on eligibility of input tax credit which are given in detail under TNVAT Act. 2006. credit can be claimed on the basis of duplicate copy / carbon copy of the invoice obtained from seller.• Tax invoice is to be issued in duplicate – Original for buyer and the duplicate is to be retained by the seller. The input tax credit can be adjusted against the tax payable by the purchasing dealer on his sales. TRANSACTIONS FOR WHICH INPUT TAX CREDIT NOT ELIGIBLE:(a) Sale of exempted goods (b) Purchase of goods from outside state (CST purchase) ( c ) Goods used for personal facility of the proprietor. The dealers are not eligible for input tax credit on all inputs.. but not eligible in some cases.
e) refractors and refractory materials. extracting or processing of any goods or for extracting or for bringing about any change in any substance for the manufacture of final products. d) moulds. f) tubes. b) Pollution control. and g) Storage tanks. equipment. jigs and fixtures. Not eligible if capital goods are used exclusively for the manufacture of exempted goods.If not taken within three years credit laps. dies. laboratory and cold storage equipment. On damaged or destroyed or stolen goods Originally taken but subsequently found that the goods purchased from bogus traders (bill traders) . c) Components spare parts and accessories specified at (a) and (b) above. pipes and fittings thereof. tools.• • No one-to-one co-relation CREDIT ON CAPITAL GOODS:Capital goods” means. appliances or electrical installation for producing. packing or storing of goods in the course of business excluding civil structures and such goods as may be notified by the Government • • No credit on closing of stock of capital goods Restriction on taking credit – First year of receipt 50% eligible – Second or Third year balance 50% . – a) plant. machinery. quality control. processing. making. apparatus. Eligible even if goods are obtained through lease • • REVERSAL OF INPUT TAX CREDIT:• • • means – reduction of input tax credit to nullify input tax credit wrongly claimed or availed. used in the State for the purpose of manufacture.
who makes zero rate clearance for export.5% fully available – The balance 3% is not fully available. Claim to be filed in Form 'W' Time limit is 180 days from the date of making zero rate sale – otherwise the credit will lapse. Amount reversible has to be calculated by finding out how much it bears to the stock transfer. The following formula should be adopted. can retain the input tax credit on purchases and adjust the same against his out put tax payable on local clearances OR he shall be entitled to claim refund of input tax credit on the purchases. • • REFUND OF INPUT TAX CREDIT ON EXPORT GOODS:• Dealers. • • . parter or director for personal use INPUT TAX CREDIT ON GOODS CLEARED AS INTER-STATE STOCK TRANSFER TO DEPOTS AT OTHER STATES:• • Input tax paid in excess of 3% would be eligible.• • Free samples On goods used by the owner. Assuming input purchased at 12.5% VAT – Credit of 9.
IMPORTANT FORMS UNDER VAT:FORMS A D H I I-1 J N R W JJ KK LL TITLE Application for Registration Certificate of Registration Production cum stock register VAT Monthly return VAT Annual return VAT Monthly return (for goods under II Schedule) Return due to price variation Statement of TDS – works contract Application for refund of input tax credit by exporter Delivery note Form to be filed by clearing & forwarding agent Form of transit pass .
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