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VDS on Purchase

Presented by Md. Mamunoor Rashid

VAT is a abbreviation of Value Added Tax i.e.
Tax on Value Additions.
When we purchase/import raw materials we
have to pay VAT on import stage and then
after process the raw materials into finished
goods to sell or export. During the
manufacturing process we add some value i.e.
salary, wages, electricity, water, consumables
& profit etc. All these together is termed as
VALUE ADDITIONS and in general 15% tax
applicable on value additions.

All Manufacturer must have a VAT
Registration, it is mandatory
All importers/exporters must have a
VAT Registration, it is mandatory
All traders should have any one:
VAT/Turnover tax/BSCIC Registration

Functions in VDS
All the rules and regulations regarding VAT deduction at
source can be divided into three parts, viz:
who will deduct VAT at source, which are the services
requiring VAT deduction at source and the rates of
such deduction and which are the services do not
requiring VAT deduction at source;
Following VAT deduction at source how it has to be
deposited to the government treasury and how
certification of deduction has to be issued in form
Mushak-12kha; and
how the VAT deducted at source amount can be shown
in the relevant serials and columns of the VAT return.

Organizations upon which the responsibility

of VAT Deduction at Source lie:
Nine organizations have been given the responsibility to deduct VAT at
source. Those are as follows:
Government organizations;
Semi-Government organizations;
Autonomous bodies;
Non-Government organizations (NGOs);
Insurance companies;
Financial institutions;
Limited company (both private limited company and public limited
company but not proprietorship firm);
Educational institutions (all types of educational institutions from KG,
nursery to university both public and private);
Organization having annual turnover of more than one crore
(Explanation: Here, organization will include proprietorship and
partnership business as well.)

Services required to deduct


Services required to deduct VAT- continued

The cases where VAT deduction at source is

not needed
If any producer or manufacturer of goods supplies the goods
directly with VAT Challan.
If any trader supplies the goods directly with VAT Challan
The organizations enlisted under Turnover Tax makes supply by
issuing own cash memo inscribed with Turnover Tax enlistment
The organizations enlisted under small & cottage industry makes
supply by issuing own cash memo inscribed with enlistment
number under cottage industry.
While making payment against the bill of gas, electricity, telephone,
mobile, water etc. utility services.
If any goods with tariff value is supplied directly by the producer of
the goods by issuing VAT Challan on tariff value.
Purchase of VAT exempted goods or services.
Purchase through L/C

Penalty for Non-Comply

VDS will be realized from the VAT
Deducting company with 2% interest
per month.
VAT Deducting company will be
considered as default for noncomplying laws and fine upto Tk.
50,000 with 2% interest per month.

Purchases from Nonregistered

It is not encouraged by law but if purchase is made
from non-register firm will have to pay the VAT from
own fund and attract an offence for violation of law.
In any emergency, we can have a purchase from
such firm but not frequent.
We can enlist some firm who has valid documents
and can provide us all needs.
We can make in our factory/nominated firm by
procuring materials with valid challan under our
name and providing labour charges but that
product should not be asset.