CONCEPT OF VALUE ADDED

TAX(VAT)

SUBMITED TO:- PRESENTED BY:-

Dr.K.N.CHAWDA ANKITA JARIWALA(09)

Centre of M.Phill:- Veer

Narmad South Gujarat
Uni.
DEFINATION Of VAT

 Multi-point sales tax on sale or purchase goods or

services.

 Collected on value addition at each stage.

 VAT is a multi-stage tax levied at each stage of the

value addition chain with a provision to allow Input
Tax Credit (ITC) on tax paid at an earlier stage which
can be appropriated against the VAT liability on
subsequent sale.
 India has agreed to launch Value Added Tax (VAT)
from 1st April 2005 with two basic rates of 10% &
12.5%
 CALCULATION
Through example

Input purchased in the month Rs.200000/-

Output sold in the Rs.250000/-
month(208000+42000)
Suppose input tax paid @ 4% Rs.8000/-
(200000*4%)
Suppose output tax paid Rs.31250
@12.5% (250000*12.5%)
VAT payable during the month Rs.23250
after adjustment of input tax
credit(31250-8000)
Total tax collected by GOVT. Rs.31250

At the time of purchase Rs.8000

At the time of sale Rs.23250

DIFFERENCE
VAT
 Tax levied and collected
at every point of sale.
 It is transparent & easier
 VAT dispenses with so
many forms.
 Returns & Challan will be
filled together.
 Scrutinity of return is less
difficult.
 Few forms are required
 2 taxation rates mostly
 Self assessment by
dealer.
 Penalties will be stricter
SALES TAX
 It is not levied at every stage
of sale.
 Computation of tax liability is
complex.
 There is a misuse of forms
resulting in tax evasion.
 Return & Challan are filled
separately.
 Scrutinity of returns is
comparatively more difficult.
 Huge number of forms
required.
 Many taxation rates.
 Assessment done by the
department.
 Penalties are less stricter.
IMPORTANCE OF VAT
 More equitable:- tax burden shared by all dealers.
 More transparent:- Easy procedures & only 2 rates.
 Simpler:- Easy computation & easy compliance
 Credit for input taxation:- cost efficiency
 Better compliance:- Through self policing
 Prevents cascading effect:- Through input rebate
 Avoids distroitation in trade & economy:- Uniform tax
rates.
GUJARAT VALUE ADDED TAX
 Gujarat Value Added tax (GVAT) was come into force
from 1st April 2006
 From its execution this act was amended several
times.
 Last amendment was introduced on 31-07-2009.
CONCEPTS OF GVAT
 Following definitions
are given by
GVAT_2003  Purchase price
 Agriculture  Raw material
 Business  Registered dealer
 Capital goods  Resale
 Central act  Sale & Sale price
 Commission agent  Tax & Tax period
 Dealer
 Earlier law
 Taxable goods & turnover
 Goods
 Turnover of purchase & sale
 HSN code
 Total turnover
 Manufacture  Value of goods
 Person  Year
 Place of business  Zero rated tax
THE DEALER

“Dealer means a person who carries on, in the course of
his business activity to buy, to manufacture, to sell , to
supply or to distribute goods for consideration in cash or
by way of differed payment or commission, remuneration
or otherwise.
 Dealer Includes The Following:-
A. The central & state govt., any local & statutory authority,
A company, A partnership firm, A Hindu Undivided family
Or any society, club, association or body incorporated or
not which carries on business.
B. A casual dealer
C. An auctioneer
D. A factor, broker, commission agent, delcreder agent or
mercantile agent.
E. A person who transfers property in goods otherwise than
in purchase of contract is a dealer
CONTINUE……
F. A person who transfers property in goods involved in
execution of work contract.
G. A person who delivers goods on Hire purchase or on
installment payment.
H. A person who transfers the right to use any goods.
CONTINUE….

 Deemed As Dealer  Not Deemed As

Dealer
 A society, club, firm or  An agriculturist who
an association sells exclusively
agriculture goods
 The central or state
govt., or a local or any  An individual who sells
statutory authority exclusively fish or any
sea food.
 Any person or body
which disposes any  A charitable, religious
goods. or educational
institution
CONCLUSION

VAT is introduced in India in order to

minimize trade barriers, to make accounts more
transparent & to maximizes revenues.
From its introduction, many amendments are
take place. Recently on 31-07-09 GVAT was amended
which was effected from 1-08-2009
Over the time, It was decided that the VAT
rates would be merged into one uniform rate &
Central State Tax (CST) will be phased out.
BIBLIOGRAPHY
 LATE R.P.SHAH & C.A.ATUL. R. SHAH
The Gujarat Value Added Tax Act 2003
By the tax publications AHMEDABAD.

 WWW.gujaratsalestax.gov.in/vatgujar
at
. html
THANK YOU