VAT

I/P tax – Tax paid on Purchases by Registered dealer O/P tax – Tax paid on sales by Registered dealer .

Multipoint Sales Tax.How is VAT different from Sales Tax ? VAT. (You get tax credit on Purchases) . Successive sale does not attract Sale Tax. However under VAT . Sales tax – Levied at the stage of first sale . tax is levied and collected at every point of sale.

12.00) + (15. Sales tax payable would be : 10% on 125 = Rs 12. the longer the Distribution chain . greater is the tax amount paid to the government.00 .00 Thus under VAT .50) + (30.15.00 . Industries to trim down the Distribution channels in order to control prices.50 Under VAT regime . VAT = (12.05 .00) = Rs 20.Consider the chain : Manufacturer—Wholesaler –Retailer Manufacturer Wholesaler Retailer Purchases Sales 100 125 125 150 150 300 Sales tax rate/VAT RATE = 10% Under ST regime . .10.

Ex : 2% CST in the first year of VAT introduction 1% CST in the following year and then no CST. .Under VAT regime . CST will not be eliminated immediately. It will be phased out in phases. Thus what would be available would be hybrid VAT and not pure VAT initially.

tax base will get widened. Everyone would demand invoice and thus tax base would get widened. everyone will try to get credit on his purchases. you need to have a tax/VAT invoice. This is because.Under VAT regime . . And to claim credit .

VAT rates ? 0% . . despite ranting tax credit on I/P Purchases.Gold .Commodities like Rice . that revenue of State government would not diminish . 1% . Milk .Agricultural Inputs Around 10-12% . This rate is called RNR (Revenue Neutral Rate). This is such a rate .on all other goods. Silver 4% . ….

Sales under VAT – can broadly be classified under 3 categories : Taxable Sales Exempt Sales Zero rated sales (Exports) Tax rate payable = 0% Tax payable Tax rate payable = 0% Can claim I/P tax credit on Purchases Cannot claim Can claim I/P I/P tax credit on tax credit on Purchases Purchases .

.Invoices under VAT regime : Tax invoice – will contain identity of Seller and Buyer i. Name .e. Address . Generally issued for small amounts. Registration number Retail invoice – will contain identity of Seller alone On Retail invoice you cannot claim I/P tax credit.

Proof required to claim I/P tax credit : Must have a copy of tax invoice .How to pay and claim VAT ? To be paid at the time of monthly returns submission. Will get credit within the same month for VAT paid on Purchases.

Purchases with standard VAT rate.Purchases with 1 % VAT rate -.Purchases from Suppliers who are not registered for VAT -. .Imports and Purchases from Other States -.Purchases exempt from VAT -.Purchases with VAT rate of 4% -.Records to be maintained for the purpose of VAT accounting Purchase records – Details of : -.

Taxable sales at 4% -.Taxable sales at Standard rate.Exempt Sales -.Sales Records – Details of : -.Inter state sales -.Zero rated sales -.Taxable sales at 1% -. .

3 digits for circle. In another opinion suggested . 4 digits for individual dealer and 1 digit for checking purposes.TIN – Tax Identification Number for all dealers will be given. it would be a 12 digit code. First 10 digits will be PAN of Income Tax and next two digits will be serial number of the dealer Reason for this suggestion is that customs and central excise authorities are already using PAN based registration number for control purposes. It has been suggested that TIN should be a 10 digit code consisting of : 2 digits for State. .

Sign up to vote on this title
UsefulNot useful