Saturday, January 8, 2011
Maharastra Value Added Tax Matters: Due Date for MVAT audit in form 704 for financial ...
Maharastra Value Added Tax Matters: Due Date for MVAT audit in form 704 for financial ...: "TRADE CIRCULARNo. VAT/ AMD-1009/IB/ADM-06 ,Dt : 28th January, 2010.Trade Cir. 5 T of 2010, Mumbai Sub: Extension of date for Submi..."
Filing of electronic returns
TRADE CIRCULAR To .......... .......... No.VAT-2008/H.Q.2/ADM-7/PSI-104/B- Mumbai, Dt.18.11.2008 Trade Cir. No.40 T of 2008. Sub: Filing of electronic returns. Ref: (1) Notification No. VAT/AMD-1007/1B/Adm-6 dt. 14.03.2008 (2) Notification No. VAT/AMD-1007/1B/Adm-6 dt. 19.04.2008 (3) Notification No. VAT/AMD-1007/1B/Adm-6 dt. 30.08.2008 (4) Notification No. VAT/AMD-1007/1B/Adm-6 dt. 16.09.2008 (5) Trade Circular No.8T of 2008 dt. 19.03.2008. (6) Trade Circular No. 16T of 2008 dt. 23.04.2008. (7) Trade Circular No.33 T of 2008, dt.30.09.2008. (8) Notification No. VAT/AMD-1007/1B/Adm-6 dt. 18.09.2008.,, Gentlemen/Sir/Madam, 1. As per Notification No. VAT/ ADM - 1007/ IB/ Adm-6, dated 18th September, 2008, it has been provided that in respect of the periods starting on or after 01.07.2008, the registered dealers holding valid Entitlement Certificates as on 30.09.2008 and who are covered by Package Schemes of Incentives, 1979, 1983, 1988, 1993 or Package Scheme of Incentives for Tourism, 1993 for 1999 shall make the payment of tax or interest if any and file Electronic Return as provided in the said sub rule (5) of the MVAT Act. The process of filing e-returns by such units has already begun. By this time most of the Units must have filed e-return. However, to clarify the provision, this circular is issued. 2. Thus, it has been made mandatory for all the dealers covered under the said Package Schemes of Incentives, to file Electronic Returns. 3. All the dealers are requested to immediately get registered themselves for filing of the return. 4. The deferment / exemption from tax will be admissible in respect of a particular period for which the holder of the Eligibility Certificate and Certificate of Entitlement has filed proper return as prescribed under the Act. Now since submission of return electronically has been made mandatory in respect of dealer covered under the said Package Schemes of Incentives, it may please be noted that if a dealer fails to file such return electronically, then such dealer would not be entitled to such benefit for such period covered by the return. All refund granting authorities are directed to take note of above instructions and refund to such dealers should not be granted unless returns for the said period are filed electronically. All the nodal officers and all the officers handling the Package Scheme of Incentives cases are hereby directed to get such dealers registered for filing of E-Return and monitor the progress thereof. 5. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification. 6. You are requested to bring the contents of this circular to the notice of the members of your association. Yours faithfully, (SANJAY BHATIA) Commissioner of Sales Tax, Maharashtra State, Mumbai. |
Procedure for online submission of application [Statement of Requirement ] for the statutory forms (C/F/H/EI/EII) under the Central Sales Tax Act, 1956 and delivery at the place of business of the dealer.
TRADE CIRCULAR
Dated: 31.03.2009
No. VAT/U.O.R.No. 646/JC(Reg.)
Trade Circular No.12 T of 2009
Sub.: Procedure for online submission of application [Statement of Requirement ] for the statutory forms (C/F/H/EI/EII) under the Central Sales Tax Act, 1956 and delivery at the place of business of the dealer.
----------------------------------------------------------
Extention of date for existing mannual system for accepting applications for declarations prior to 1/04/2008.
Ref.: 1. Trade Circular No.4T of 2006 dated 09/01/06.
2. Trade Circular No.10T of 2006 dated 29/03/06.
3. Trade Circular No.17 T of 2006 dated 28/06/06.
4. Trade Circular No.1 T of 2008 dated 25/01/08.
5. Trade Circular No.15 T of 2008 dated 19/04/08.
6. Trade Circular No.2 T of 2008 dated 23/01/09.
Dear Sir/Madam,
The representation are received from the organisations for extention of time for applying for declarations prior to 31/03/08. The request has been considered and the date is extended as follows:-
Any application seeking declarations for the period prior to 01/04/2008 may be made as per the existing manual system (on CD) or available on new online system. However such application shall be made prior to 30/06/09. It may please be noted that the declarations prior to period 01.04.2008 will not be issued after 01/07/2009.
This circular cannot be made use of for legal interpretation of provisions of law. If any member of the trade has any doubt, he may refer the matter to this office for clarification.
You are requested to bring the contents of this circular to the notice of all the members of your association.
Yours faithfully,
(SANJAY BHATIA)
Commissioner of Sales Tax,
Maharashtra State, Mumbai
Dated: 31.03.2009
No. VAT/U.O.R.No. 646/JC(Reg.)
Trade Circular No.12 T of 2009
Sub.: Procedure for online submission of application [Statement of Requirement ] for the statutory forms (C/F/H/EI/EII) under the Central Sales Tax Act, 1956 and delivery at the place of business of the dealer.
----------------------------------------------------------
Extention of date for existing mannual system for accepting applications for declarations prior to 1/04/2008.
Ref.: 1. Trade Circular No.4T of 2006 dated 09/01/06.
2. Trade Circular No.10T of 2006 dated 29/03/06.
3. Trade Circular No.17 T of 2006 dated 28/06/06.
4. Trade Circular No.1 T of 2008 dated 25/01/08.
5. Trade Circular No.15 T of 2008 dated 19/04/08.
6. Trade Circular No.2 T of 2008 dated 23/01/09.
Dear Sir/Madam,
The representation are received from the organisations for extention of time for applying for declarations prior to 31/03/08. The request has been considered and the date is extended as follows:-
Any application seeking declarations for the period prior to 01/04/2008 may be made as per the existing manual system (on CD) or available on new online system. However such application shall be made prior to 30/06/09. It may please be noted that the declarations prior to period 01.04.2008 will not be issued after 01/07/2009.
This circular cannot be made use of for legal interpretation of provisions of law. If any member of the trade has any doubt, he may refer the matter to this office for clarification.
You are requested to bring the contents of this circular to the notice of all the members of your association.
Yours faithfully,
(SANJAY BHATIA)
Commissioner of Sales Tax,
Maharashtra State, Mumbai
Periodicity of return filing for the period 01.04.09 to 31.03.10
No. VAT/ JC MAHAVIKAS/
Trade Cir. No.26T of 2009 Dated: 1st October 2009
Sub: Periodicity of return filing for the period 01.04.09 to 31.03.10
Ref.: List of dealers on the website www.mahavat.gov.in showing periodicity of return filing.
Gentlemen/ Sir/ Madam,
All the dealers are required to file returns due under the MVAT Act, 2002 and CST Act, 1956 as per the provisions of section 20 of the MVAT Act, 2002 and Section 9(2)(A) of the CST Act, 1956 read with Rule 17 and Rule 18 of the MVAT Rules 2005. The periodicity of the return filing as determined by the automated system has been put on the web site www.mahavat.gov.in. Rule 18 and Rule 17(5) provide for the returns to be filed by the dealers under the Package Scheme of Incentives and Rule 17(4) provides for the periodicity of the returns to be filed by the dealers other than the dealers under the Package Schemes of Incentives. The relevant part of the Rule17 is reproduced for reference as under:
“17. Submission of returns.-
(4) Subject to the other provisions of this rule and of rule 18.—
(a) (i) every registered dealer who is a retailer and who has opted for composition of tax under sub-section (l) of section 42 shall file a six monthly return within twenty-one days from the end of the period of six months to which the return relates;
(ii) every registered dealer to whom the Explanation to clause (8) of section 2 applies, if his tax liability during the previous year was rupees one crore or less, shall file an annual return within twenty-one days from the end of the year to which such return relates.
Provided that nothing in this paragraph shall apply to the said registered dealer unless he applies to the Joint Commissioner of Sales Tax (Returns), in Mumbai or as the case may be Joint Commissioner of Sales Tax (VAT Administration) in rest of the State;
(b) every registered dealer to whom clause (a) does not apply and,-
(1) whose tax liability during the previous year was rupees one lakh or less or, as the case may be, who had no entitlement for refund, or
(2) whose entitlement for refund during the previous year was ten lakhs or less, shall file a six-monthly return within twenty-one days from the end of the period of six months to which the return relates.
(1) whose tax liability during the previous year was rupees one lakh or less or, as the case may be, who had no entitlement for refund, or
(2) whose entitlement for refund during the previous year was ten lakhs or less, shall file a six-monthly return within twenty-one days from the end of the period of six months to which the return relates.
(c) every registered dealer to whom clause (a) or (b) does not apply and,-
(i) whose tax liability during the previous year had exceeded rupees ten lakhs or
(ii) whose entitlement for refund during the previous year had exceeded one crore,
shall file a monthly return within twenty-one days from the end of the month to which the return relates.
(d) any other registered dealer shall file a quarterly return within twenty one days from the end of the quarter to which the return relates.
Explanation I.- For the purposes of this rule, the expression “tax liability” in relation to a registered dealer means the total of all taxes payable by him in respect of all his places of business or, as the case may be, all the constituents of his business in the State under the Central Sales Tax Act, 1956 and Maharashtra Value Added Tax Act, 2002 , after adjustment of the amount of set-off or refund claimed by him, if any, under the respective Act.
Explanation II.- For the purposes of this rule the expression “entitlement for refund” in relation to a registered dealer means the net refund payable to him in respect of all his places of business or, as the case may be, all the constituents of his business in the State under the Central Sales Tax Act, 1956 and Maharashtra Value Added Tax Act, 2002, after adjustment of the amount of set-off claimed by him against taxes payable under the said Acts.”
Thus the periodicity of filing of returns of a dealer depends upon tax liability or refund entitlement of the dealer during the previous year. Hence, while fixing the periodicity of the dealer for the period 2009/2010, the total taxes payable net of setoff and refund entitlement shown by the dealer during the year 01.04.2008 to 31.03.2009 as per the returns filed for the periods, as shown in Table below, have been considered.
Returns Periods considered for determination of Tax payable during 2008-2009.
Table - 1
| Form | |
| Monthly | March 08, Ar 08, May 08, June 08, July 08, Sept 08, Oct 08, Nov 08, Dec 08, Jan 09 and Feb 09 |
| Quaterly | Jan-Mar 08, Apr-Jun 08, July-Sept 08, Oct-Dec 08. |
| Six Monthly | Oct 2007-March 08, Apr-Sept 08 |
Some of the dealers have represented that the periodicity determined in their case is incorrect. In order to address such representation the dealers whose periodicity for the period Apr 2009 to March 2010 do not match with the system generated periodicity as displayed on the web www.mahavat.gov.in, are requested to approach the Joint Commissioner of Sales Tax, In charge of Return Branch pertaining to their location and establish their actual periodicity of filing of returns for the period 2009/2010 with documentary evidence.
The joint commissioner of Sales Tax In Charge of return Branch pertaining to a particular location have already been instructed to verify the correctness of dealer’s claim of periodicity in such cases and inform Joint Commissioner, Mahavikas on or before 1st of every month in respect of eligible changes in periodicity of return filing for the period 01.04.2009 to 31.03.2010
This circular cannot be made use of for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
You are requested to bring the contents of this circular to the notice of all the members of your association.
Yours faithfully,
(Sanjay Bhatia)
Commissioner of Sales Tax
Maharashtra State, Mumbai.
Profession Tax Enrollment Incentive Scheme 2009
RADE CIRCULAR
Date: 03/11/2009
No.PFT/2009/P.T./Adm-29/.../B
(Trade Cir.No.30T of 2009)
Date: 03/11/2009
No.PFT/2009/P.T./Adm-29/.../B
(Trade Cir.No.30T of 2009)
Sub: Profession Tax Enrollment Incentive Scheme 2009 The Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975. Ref: 1. Budget Speech by Hon'ble Finance Minister.
2. Notification published in the Govt. Gazette Government Resolution No. P.T.-I 109/C.R. 35/Taxation-3, Mantralaya, Mumbai-400 032 dated 29'" July, 2009.
Gentlemen/Sir/Madam,
The Maharashlra State Tax on Professions, Trades, Callings and Employments Act, 1975 (Profession Tax Act) is being implemented in the State w.e.f. 1st April, 1975.
Under the Act, every self employed person engaged in any profession, trade, callings and employment is required to obtain Enrollment Certificate and pay profession lax yearly as per the provisions of the Act. The Government has observed that, many persons/ firms/ societies/ institutions etc. despite being liable to pay Profession Tax have failed to obtain enrollment certificate and arc not paying profession tax. The Act provides for levy of penalty on such "persons" for failure to get enrolled.
2. The Government wishes that un-enrolled self employed persons should come forward, get themselves enrolled, and should pay Profession Tax due from them.
3. Accordingly, in order to provide incentive for enrollment, the Government of Maharashtra issued a resolution referred to at No.2. The aforesaid resolution is available on website www.mahavat.gov.in. This resolution has outlined the scheme of incentives and delegated to Commissioner of Sales Tax the powers to frame the procedure and to implement the scheme. Accordingly this circular is being issued. The salient features of the scheme are as under.
4. Scheme
4.1 Duration of Scheme:
The Amnesty Scheme is open for the period from 1st August, 2009 to 31st March, 2010 and is called "Profession tax Enrollment Incentive scheme 2009".
4.2 "Persons" eligible for Amnesty Scheme are:
All persons/ firms/ establishments who are liable but not yet enrolled under the Act.
4.3 Benefits under the scheme:
a) For persons/ firms/ establishments liable for enrollment during any period prior to 1.4.05 and yet not enrolled.
i) Tax, interest & penalty in respect of periods prior to 1/04/2005 would be waived in full.
ii) The amount of penalty on the tax payable for period 1.4.2005 onwards would be waived in full.
b) Person/firms/establishments liable on or after 1.4.05 but not enrolled
i) The amount of penalty from the year of liability till the date of enrollment would be waived in full.
4.4 Conditions of Amnesty:
i) Persons / firm / establishment not holding Enrollment certificate must apply for Enrollment during the period of said scheme.
ii) The tax payable under the Act for the periods 1st April, 2005 or from the date of liability where such (.late is after 1.4.2005 to 3 Is1 March. 2010 along with interest on it is to be paid by the self employed persons during the Amnesty period.
iii) Under no circumstances the amount paid by the applicant prior to 31st July 2009 shall be adjusted towards the amount to be paid as per the said scheme. Similarly no refund will be granted for the amount paid prior to the said scheme.
4.5 Procedure:
(1) Unenrolled persons are required to apply for EnroIIment Certificate (E.C.) in form II under Maharashtra Profession Tax rules. The application form duly filled and signed should be submitted to Profession Tax registration officer along with the proof of address and the details of profession/Trade/Calling/employment. After entering the mandatory fields in the system, a registration officer will generate erollment number and provide the same to the applicant for the purpose of payment of requisite tax and interest in the bank/ treasury. At this stage the certificate shall not be issued but the number is given to applicant only to facilitate payments.
(2) On obtaining Enrollment number applicant should make the payment of tax and interest as applicable, in full.
(3) An application for the scheme in prescribed format (Annexure-1) along with the proof of payment of requisite amount has to be filed before the registration authority. Upon receipt of the said application, the registering authority will verify the correctness of application and payment made by the applicant. If the registering authority is satisfied that the application is in order as per the scheme, he will issue an acknowledgement to the applicant provided under annexure-I. The registering authority shall not issue any other communication separately.
(4) In case after generating EC number, applicant does not pay the full amount of tax and interest payable within the prescribed period, enrollment certificate will be generated as per the actual liability i.e. without giving him the benefit of the scheme. Full payment of tax and interest with in the prescribed time is the prerequisite for incentive under this scheme.
(5) After completing all the above/referred formalities, registration officer will provide a copy of enrollment certificate to the applicant.
(6) In ease of any difficulty, the applicant may contact the administrative Joint Commissioner (P.T.) or Joint Commissioner of Sales Tax (Adm) VAT of the respective Divisions.
If any member of trade has any doubt, he may refer the matter to this office for further clarification.
You are requested to bring the contents of this circular to the notice of all the members of your Association.
Yours faithfully
(Sanjay Bhatia)
Commissioner of Sales Tax,
Maharashtra State, Mumbai.
ANNEXURE- I
Application form for Profession Tax Enrollment Incentive Scheme- 2009
Date: ________________
1. Name of the Applicant
2. Address:
3. E.C.No.
To,
The Profession Tax Officer ( ),
Registration
Sub: Amnesty Scheme 2009 under Profession Tax Act, 1975.
Ref: Government Resolution No. P.T.-l 109/C.R. 35ATaxation-3, Mantralaya, Mumbai-400 032 dated 29th July, 2009.
Sir,
1. I _________________________ of M/s___________________________________ am unenrolled person liable to pay tax under the said Act.
2. I hereby make an application for availing of the said incentive scheme-2009 declared by Government of Maharashtra under Government Resolution referred above. The terms and conditions laid in the said amnesty scheme are fully acceptable to me.
3. The details of arrears are as follows
TABLE
| Sr.No. | Period | Amount Payable | Amount Paid | Bank and Branch/Treasury | Dt. of payment | ||||
| - | - | Tax | Interest | Total | Tax | Interest | Total | - | - |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| . | . | . | . | . | . | . | . | . | . |
4. I hereby enclose self-attested copies of the chalan of payment made by me as detailed above.
Kindly consider my request for amnesty under the said incentive scheme-2009.
Place:
Yours faithfully,
Date:
(Signature, Name and Designation)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ACKNOWLEDGEMENT
ACKNOWLEDGEMENT
E.C. Number:_______________________
Received your application under Profession Tax Enrollment Incentive Scheme-2009. As you have complied to the conditions under the above scheme, your application is accepted.
Date :
Profession Tax Officer
Registration
Due Date for MVAT audit in form 704 for financial year 2008-09 extended to 31st March 2010
TRADE CIRCULAR
No. VAT/ AMD-1009/IB/ADM-06 ,
Dt : 28th January, 2010.
Trade Cir. 5 T of 2010, Mumbai
Sub: Extension of date for Submission of Audit Report for the year 2008-09.
Ref.:
1. Notification No. VAT/AMD-1009/IB/ADM-6 dated 21st August 2009.
2. Notification No. VAT/AMD-1009/IB/ADM-6 dated 26th August 2009.
3. Trade Circular No. 27T of 2009 dated 1st October 2009.
4. Representations received from various Trades and Associations.
5. Letter received from Finance Department bearing No. VAT-1510 / C . R.-17 / Taxation-1 dated 28th January 2010.
Gentlemen/Sir/ Madam,
You may recall that the existing Form-704 was replaced by New Form-704 by notification cited at Ref.-2. A notification cited at Ref.-1 was issued and it was made mandatory for all dealers to submit Audit Report for year 2008-09, electronically. Further, vide Trade Circular cited at Ref.3 this office had explained the procedure for filing Form-704 electronically. The date for filing Form-704 is 31st January, 2010.
2. Representations from various Trades and Associations have been received with a request to extend the due date for submission of Audit Report in Form-704 for the year 2008-09. It was stated that this being the first year of e-filing of Audit Report, dealers as well as Auditors need more time to accustom with new procedure. The issue has been examined. The matter was referred to the Finance Department for consideration.
3. The Finance Department, Government of Maharashtra has examined and considered aforesaid representations. Accordingly, it has been decided to extend the due date for submission of the Audit Report in Form-704 to 31st March 2010.
4. In view of this the last date for submission of Audit Report in Form-704 for the period 2008-09 shall be the31st March 2010. Dealers shall be required to submit “the Statement of Submission of Audit Report in Form-704? along with required documents on or before 10th April 2010.
5. In order to avoid initiation of penalty proceedings, it is mandatory for the dealer to upload Audit Report in Form-704 on or before the 31st March 2010 and submit requisite documents (to authorities referred in Para 4(iii) of the Trade Circular dated 1.t October 2009 No. 27T2009) on or before 10th April 2010.
6. For removal of doubts, it is hereby clarified that if any additional amount becomes payable as a result of Audit findings and dealer files revised return then the interest shall be calculated as per provisions of the section 30(2) of the MVAT Act, 2002. In other words, this extension, in no way affects the liability to pay interest as per provisions of section 30(2) of the MVAT Act, 2002.
7. Needless to state that no further extension shall be provided for uploading the Audit Report or submission of requisite documents.
8. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
9. You are requested to bring contents of this circular to the notice of the members of your association.
Yours faithfuly,
(Pramod Nalawade)
Addl. Commissioner of Sales Tax (Est.)
Maharashtra State, Mumbai.
No.VAT/AMD-1009/1B/ADM-6 Mumbai, Dt. 28th January, 2010.
Trade Cir. No.5 T of 2010
1. Copy forwarded to:
(a) All Addl. Commissioners of Sales Tax in the State.
(b) All Joint Commissioners of Sales Tax in the State.
(c) The Joint Commissioner of Sales Tax (Mahavikas) with request to upload this Trade Circular on the Departments web-site.
(d) All Sr. Dy. Commissioners of Sales Tax in the State.
(e) All Dy. Commissioners of Sales Tax in the State.
(1) All Asstt. Commissioners of Sales Tax in the State.
(g) All Sales Tax Officers in the State.
2. Copy forwarded with compliments for information to:
(a) The Officer on Special Duty, Finance Department, Mantralaya, Mumbai.
(b) The Under Secretary, Finance Department, Mantralaya, Mumbai.
(c) The Accounts Officer, Sales Tax Revenue Audit, Mumbai and Nagpur.
3. Copy to all Desks and Desk Officers in the office of the Commissioner of Sales Tax, Maharashtra State, Mumbai.
Rate of tax, Set-off on Timber for the period 1.04.2009 to 30.06.2009 – Clarification
Gentleman/Madam,
You are aware that rate of tax on timber was reduced to 4% in the Budget Speech of Hon’ble Finance Minister, Maharashtra for the year 2008-09. This reduction in rate has been made with retrospective effect from 1st April 2009. The Gazette Notification for the amendment was published on 1st July 2009.
2. Prior to this, the trade was informed vide Trade Circular No.l3T of 2009 dated 15th April 2009 that the rate of tax on timber from 1st April 2009 was 12.5% and the trade was asked to collect and pay tax accordingly. After the retrospective amendment in the Budget 2009-10, queries have been received from trade regarding tax already collected and paid or set-off already claimed and the rate of 12.5% for the intervening period from 1st April 2009 to 30th June 2009. In this respect following instructions are now issued.
i) Tax on sale of timber will be payable at the rate of 4% from 1.4.2009.
ii) Where the dealers have collected tax at the rate of 12.5% on their sales, they may issue credit notes to the purchasers for the difference of 8.5% and file revised returns for the period for which taxes were collected and paid at higher rate. The dealers who have collected tax at the rate of 12.5% but do not issue credit notes and file revised returns, shall be liable for forfeiture to the extent of excess tax collected by them.
iii) Purchase of timber will be eligible for set-off at the rate of 4% i.e. the scheduled rate of tax irrespective of the actual tax collection in their purchase invoices. Dealers who have claimed set-off at higher rate of 12.5% in their returns for the period April to June, are required to revise their returns accordingly.
3. Forest department selling timber by auction may have collected taxes at the rate of 12.5% on sales during this period. They should file revised returns for the periods for which the taxes are collected at higher rate and refund the excess tax collected from the purchaser. In case the taxes are paid by book adjustment by the department and cannot be refunded to the purchaser, the department should submit transaction wise statement of such tax collection. This excess collection shall be liable for forfeiture. Persons from whom tax was so collected at higher rate can claim refund u/s 32(6) of MVAT Act.
4. This circular cannot be made use of for legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
5. You are requested to bring the contents of this circular to the notice of all the members of your association.
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Thursday, January 6, 2011
Procedure for registration under DVAT Act.
An application for registration under DVAT Act is to be made in form DVAT 04. The application should be accompanied by the following supporting documents :
Mandatory supporting documents
(a) | Annexures of the Form duly filled in (in case any of the annexures is not applicable, same may be mentioned) |
(b) | Proof of incorporation of the applicant dealer i.e. Copy of deed of constitution (partnership deed (if any), certificate of registration under the Societies Act, Trust Deed, Memorandum and Articles of Association etc.) duly certified by the authorized signatory. |
(c) | Proof of identity of authorized signatory signing the Registration Application Form. |
(d) | Two self addressed envelopes (without stamps) |
(e) | In case of a dealer applying for registration and simultaneously opting for payment of tax under composition scheme, please attach application in Form DVAT 01 along with this application. |
(f) | Proof of Security |
Optional Supporting Documents | |
(a) | Proof of ownership of principle place of business. |
(b) | Proof of ownership of residential property by proprietor/managing partner. |
(c) | Copy of passport of proprietor/managing partner. |
(d) | Copy of Permanent Account Number in the name of business allotted by the Income Tax Department. |
(e) | Copy of last electricity bill (The bill should be in the name of business and for the address specified as the main place of business in the registration form) |
(f) | Copy of last telephone bill (The bill should be in the name of business and for the address specified as the main place of business in the registration form) |
2.
The official receiving the application should scrutinize the application for completeness and tick the cover page of the DVAT 04 regarding the supporting documents submitted by the applicant. The supporting documents should be self-attested by the applicant.
3.
The official should mention the Ward No. on the cover page at the time of receiving application to facilitate the transfer of the registration application to appropriate authority. 4.
Since the process of registration is time bound, the official receiving the application and other concerned officers of the Front Office should ensure that there is no delay in sending the application to the concerned authority for appropriate action. All applications should be sent on the same day & in rare cases by the morning of next working day. The dispatch register shall show the date and time at which the registration was received in the ward.
5.
Since the security amount need to be calculated by the applicant, the official receiving the application should ensure that proper supporting documents with regard to reduction in the security amount are enclosed with the application and the security in the prescribed forms are enclosed in original, as per the statement of the dealer in field NO. 18 of Part A of DVAT 04.
6. It may also need to be checked whether the applicant has enclosed duly filled in DVAT 01, if he intend to opt for composition scheme. 7. The official should also check that none of the field of the application form, has been left blank. In case any field is not applicable, it should be either struck out or be mentioned "Not Applicable". 8. In case the application is not supported with mandatory documents, the application should not be accepted, by the receiving official. 9. The officer required to issue registration needs to dispose off the registration application within a period of 15 days from the date on which the application was received in DVAT Deptt, after conducting such enquiries as he deems fit. If for some reasons, registration cannot be granted within 15 days then before the expiry of this period, the officer has to issue a notice to the applicant clearly stating the grounds on which his application is proposed to be rejected and permitting him to show cause in writing within next 15 days as to why application for registration should not be rejected. Here, it should be kept in mind that if neither the registration is granted nor the notice is issued by the required date, the applicant shall be deemed to be registered under the DVAT Act and the officer shall issue a Certificate of Registration to such applicant. |
In case the applicant furnishes the reply to the notice, the office may either accept the application and register the applicant or reject the application for reasons to be recorded in writing. In case, the applicant fails to respond to the notice within the stipulated time, the application for registration shall stand rejected. |
SALIENT FEATURES OF THE ON-LINE PAYMENT SCHEME
1. Dealer can make payment of tax/interest/penalty or other dues under Delhi Value Added Tax and / or Central Sales Tax Act through Internet from anywhere and at any time.
2. Payment has to be made from saving/current account by the dealer through web site of the concerned bank.
3. User ID and Password and other information will be provided by the concerned bank.
4. Part `C' of the challan may be printed after successful payment of the dues.
5. Check 19 digit Challan Identification Number (CIN) on the challan before printing the same.
6. Enclose Part `C' of the challan after signing and stamping it with the return of the tax period to which the payment pertains at the time of filing the return with the Department of Trade and Taxes.
7. Check the payment so debited from the account statement after transaction.
8. Part `D' of the challan will be sent by the concerned bank in lieu of the payment made for record after duly signing and stamping.
9. Payments made after 8.00 pm to 8.00 am next day will be accounted in the next working day's payment while payment made between 8.00 am to 8.00 pm on any working day will be accounted for the same day.
10. Payments made at any time on Sundays & holidays will be accounted in the next working day's payment.
LOCAL SURETY BOND
KNOW ALL MEN BY THESE PRESENTS THAT
M/S ____________________
____________________
M/S ____________________
____________________
is held and firmly bound upto the President of India (hereinafter referred to as "THE GOVT." which expression shall unless excluded by for repugnant to the context, be deemed to include his successors in office and assigns) in the sum of Rs. ........
To be paid to the Government for which payments with and truly to be made to the said aforesaid dealer binds itself, its heirs, executor, administrators, and legal representative by these presents.
WHEREAS the above bounded dealer has made an application for grant of a Registration Certificate under Section 19 of Delhi Value Added Tax Act 2004 (hereinafter referred to as the said Act.)
AND whereas the said dealer has in pursuance of Section 25 of the said Act, is required to execute a bond with one surety in favour of the (Govt. in the above mention sum of Rs. ......................... for the due discharge by the said aforesaid dealer of the liability under the said Act, and for the purpose of securing and indemnifying the Government against all loss, costs or expenses which the Govt. may in any way suffer, sustain or pay by reason of the default or of failure in discharge of the liability under the said Act of the aforesaid dealer or any person or persons acting under it or for whom it may be responsible.
Now the condition of the above written bond is such that if the said dealer, its heirs, executors, administrators and legal representative shall pay or cease to be paid unto the Government amount due from it under the provision of said Act within the times prescribed under the said Act after such amount shall have been demanded from aforesaid dealer by the Commissioner of Value Added Tax, Delhi or by an officer to whom powers of the Commissioner of Value Added Tax, Delhi in this respect have been delegated and shall also at all times indemnify and save harmless the Government from all and every loss or expenses which has been or may at any time hereafter during the period in which the aforesaid dealer or any person acting under it or for whom it may be responsible, then, this obligation shall be void and no effect otherwise the same shall be and remain in full force.
AND it is hereby further agreed that in the event of the final cessation, liability of the aforesaid dealer under the Act, this bond shall remain with Commissioner of Value Added Tax, Delhi or an Officer duly authorized by him in this behalf for 36 Calendar months for recovering any loss, costs or expenses that may have been sustained, incurred or paid by the Government owing to act or default after the aforesaid dealer or any other person aforesaid and which may not have been discovered until after the final cessation of the liability of the aforesaid dealer under the said Act.
PROVIDED always that without prejudice to any other rights or remedies for recovering the loss or damage as aforesaid, it shall be open to the Government to recover the amount payable under the head as an arrear of "LAND REVENUE".
IN WITNESS OF AFORSAID DEALER
has hereunto set his hands this
has hereunto set his hands this
Date:
Signed and delivered by the above said
dealer in the presence of
dealer in the presence of
Signature of the Dealer /Principal
Witness No.1
(Name of Surety)
_________________
_________________
_________________
_________________
Hereby declare myself/ourselves surety(s) for the above dealer and guarantee that it shall do and perform all that it has above undertaken to do and perform in case of its making default herein. I/We bind myself/ourselves to forfeit to the President of India the sum of Rs. ....... in which the aforesaid dealer has bound itself or such other lesser sum as shall be deemed to be sufficient by the Commissioner of Value Added Tax, Delhi or any officer duly authorised by him in this behalf or recovery of any loss or damage which the Government sustain by reason of such default.
PROVIDED always that I/We shall not be released or discharged by reason of any for bearation Acts or commission the part of the Commissioner of Value Added Tax, Delhi which but for this provisions which discharge me/us.
AND I/we agreed that the Government may, without prejudice to any other right or remedies of the Government, recover from me/us the said sum as arrears of "LAND REVENUE".
AND I/we also agree that I/we shall not be at liberty to terminate my/our surety-ship except upon given to the said Commissioner of Value Added Tax, Delhi or delegates one year's notice in writing or my/our mention so to do and my/our liability under this bond shall continue in respect of all act, default and insolvency on the part of the said until the expiration of the said period of one year.
Date: Signature of the Surety
IN THE PRESENCE OF
WITNESS NO. 1
WITNESS NO.2
Value Added tax hereby make it mandatory for the class of dealers, whose tax period is half Yearly
F.7(7)POLICY-III/VAT/2005-06/662 DATED-17/12/2008
NOTIFICATION
The Delhi Value Added Tax Act, 2004(Delhi Act 3 of 2005) read with sub rule 5 of rule 27 of DVAT rules 2005,I Archna Arora, Commissioner, Value Added tax hereby make it mandatory for the class of dealers, whose tax period is half Yearly, to file there returns in electronic form, within 42 days of the end of their tax period, with effect from the Half Yearly returns For the tax period ending of 31st March 2009, In such manner as prescribed in the Annexure attached herewith.
This means that the electronics return for the tax period half yearly ending 31st March 2009 is to be filed by 12-2-2009
The electronic return is to be filed in addition to the return required to be filed under-sub-section (1) of the section 26 of the Delhi Value Added Tax Act, 2004
Dealer's already filling electronic return shall continue to do so in the usual manner.
(ARCHNA ARORA)
COMMISSIONER, VALUE ADDED TAX
Government of NCT of Delhi
No.F.7 (7) POLICY-III/VAT/2005-06/662 DATED-17/12/2008
Subject: Good Dealer Scheme - 2009
The Department of Trade & Taxes has evolved a Good Dealer Scheme 2009. This scheme will have the following features: -
2. The selection of Good Dealer shall be based on following criteria: -
i. No objection or appeal is pending as on the date of selection of good dealer
before any Assessment Authority / Appellate Authority / Tribunal / High Court / Supreme Court, and
ii. No Enforcement action in the last 5 years, and
iii. No late filling of returns and reports as prescribed under the DVAT Act - 2004
& Rules, and
iv. a) The Department shall identify dealers in six sectors as described below:-
Group-1 Ã Aluminum, Batteries, Cement, Electrical Goods, Furniture /
Almirah, Glassware, Hardware, Insulted wire, Iron & Steel, Marbles & Tiles, Misc., Non Ferrous Metal, Paints, Plastic Raw Material, Sanitary, Steel, Tiles, Timber, Watch & Jewellery.
Almirah, Glassware, Hardware, Insulted wire, Iron & Steel, Marbles & Tiles, Misc., Non Ferrous Metal, Paints, Plastic Raw Material, Sanitary, Steel, Tiles, Timber, Watch & Jewellery.
Group-2 Ã AC, Computer, Electrical & Electronic, Telecom,
Group-3 Ã Medicines, Medical Equipments, Cosmetics, Matteres / Carpets, Soap & Detergent,
Group-4 Ã Machinery, Spare Parts, Tyre, Two Wheeler, Four Wheeler,
Heavy Vehicle
Group-5 Ã Confectionary, Cooked Food, Dry Fruits, Edible oil, Halwai Products, IMFL. Liquor, Milk & Dairy Product, Non alcoholic, Beverages
Group-6 Ã Petroleum Products, Lubricants, Readymade Garments, Photography Goods, Gift Items, Chemical and Detergent, Woolen, etc.
a) After that the Department shall find out average growth in these sectors in the last 3-years since introduction of VAT, and
b) The dealers who register 5% higher tax growth rate than the average growth of tax in the sector continuously for the last three years as per the information available.
c) All the good dealers identified based on above criteria will be honoured and they will be entitled for the following benefits:
i. They shall be given a Certificate and Momento by Hon'ble Chief Minister / Finance Minister in the function.
ii. No increase in security deposit for one year for issuance of Forms.
iii. No inspection/adverse survey of such dealer shall be conducted unless specifically approved by the Commissioner (T&T)
3. This list of `Good Dealers' shall be displayed on the Department's website.
4. This is being issued with the approval of competent authority.
Due Date extended for filing DVAT-51 up to 31/03/2010 for Ist and IInd Quarter of F.Y. 2009-10
In exercise of the powers conferred under rule 49A of the Delhi Value Added Tax Rules 2005, sub-section (2) of section 9 of the Central Sales Tax Act, 1956, and sub rules (7) of rule 12 of the Central Sales Tax (Registration and Turnover) rule 1957. I, Jalaj Shrivastava ,Commissioner, Value Added Tax, Government of National CapitalTerritory of Delhi, Do hereby, extend the time limit prescribed in
(a) sub rule (1) of rule 67 of the Delhi Value Added Tax Rules 2005 and rule 4 of the
Central Sales Tax (Delhi) Rules 2005 for furnishing of reconciliation return in Form DVAT 51, up to 31st March 2010 for the Ist and IInd quarter of the year 2009-10
(b) Sub rule (5) of rule 5, clause (a) of sub rule (3) of rule 6, clause (a) of sub-rule (5)
Of rule 7, sub rule (2) of rule 9, rule 6B and sub-rule (2) of rule 6A of the Central Sales Tax(Delhi) Rules, 2005 and sub rule (10) of rule 12 of the Central Sales Tax ( Registration and Turnover) Rules, 1957 for furnishing of the portion marked ‘original’ of the Declaration Forms ‘C’,’E-1’ or ‘E-11’,’F’,’I’,’J’ and ‘H’ respectively , upto 31st March 2010 for the Ist and IInd quarter of the year 2009-10 in respect of Declaration Forms which relate to the year 2009-10
NOTIFICATION
No.F. 3(27)/Fin(T&E)/2009-10/ In exercise of the powers conferred by section 102 of the Delhi Value Added Tax Act, 2004 (Delhi Act 3 of 2005), the Lt. Governor of the National Capital Territory of Delhi, hereby, makes the following rules to further amend the Delhi Value Added Tax Rules, 2005, namely:-
RULES
1. Short title and commencement – (1) These rules may be called the Delhi Value Added Tax (Amendment) Rules, 2010.
(2) They shall come into force on the date of notification in Delhi Gazette.
2. Amendment of Rule 7 – In the Delhi Value Added Tax Rules, 2005 (hereinafter referred to as “the principle Rules”), in rule7, in sub-rule (1),-
(i) for clause (b) of the following clause shall be substituted, namely:-
“(b) In the case of goods specified in the third schedule – 40 percent”
(ii) after clause (d), the following clause shall be inserted, namely:-
“(e) declared goods, as defined from time to time in section 14 of the Central Sales Tax Act, 1956 (74 of 1956), - 50%.”
3. Amendment in Form DVAT-16 - In the principle Rules, in the Form DVAT-16 appended therein, -
(i) after entries in row R5.2 and before the entries in row R5.3 the following row shall be inserted namely:-
“R5.2 (1) Goods taxable at 5%”;
(ii) in row R5.7, after the words “exempted sale”, the words “other deduction claimed” shall be inserted;
(iii) after entries in row R6.2, the following rows shall be inserted namely:-
“R6.2(1) Goods taxable at 1%
R6.2(2) Goods taxable at 4%
R6.2(3) Goods taxable at 5%
R6.2(4) Goods taxable at 12.5%
R6.2(5) Goods taxable at 20%
R6.2(6) Works Contract taxable at 4%
R6.2(7) Works Contract taxable at 12.5%
R6.2(8) Exempted purchase”
(iv) For the words “Balance brought forward from line R8” occurring above row R9.1, the following entry shall be substituted, namely:-
“R9.0 Balance brought forward from line R8 (Positive value of R8)”
(v) after row R11.7, the following row shall be inserted, namely:-
“R11.7(1)Exempted sale / purchase including High Sea Sale etc” .
(vi) after instruction 5, the following instructions shall be added, namely:-
“6. Attach copy of month wise summary of Sale and Purchase registers maintained in Form DVAT-30 & 31 in the format appended at Annexure-2A & 2B. This should be reported dealer wise instead of bill & date wise. Sale/purchase made from un-registered dealers may be reported in one row for a month.
7. Dealers having tax period other than a month should also report the sale/purchase summary month wise.
8. Works Contractors should report gross sale turnover during the tax period including labour, services and consumables in the return and claim exemption for service charges etc. by mentioning it under item R5.7.”
4. In the principle rules, in the Form DVAT-16 appended, in Annexure after row A3.14, following rows shall be inserted, namely:-
“A3.15 Reduction in Input Tax Credit due to sale of goods at price lower than the purchase price [section 10(5)].
A3.16 Second or third installment of balance tax credit on capital goods [section 9(9)(a)].
A3.17- Opening Stock
A3.18 – Closing Stock”
By order and in the name of the Lt. Governor, of the National Capital Territory of Delhi,
DVAT New rule 6A w.e.f. 01/04/2010
“For the purpose of working out input tax credit, the input tax credit on the closing stock available with the dealer at the end of every tax period shall be carried forward to the next tax period or the following tax period or periods, as the case may be, till such stock is sold by the dealer.”
Also the dealer can claim refund in the following case only:-
1) Export sales
2) Dealer making inter state sales
3) In cases where the dealer being a manufacturer is making purchases at higher rate of tax while the sales of goods manufactured by him (not being exempt under section 6) are taxable at the lower rate under the Act.
Wednesday, January 5, 2011
goodsandserviceGSTtax: GST rollout to miss April deadline
goodsandserviceGSTtax: GST rollout to miss April deadline: "The UPA government’s proposed comprehensive indirect tax reform, goods and services tax (GST), will miss its scheduled rollout from April 1..."
Presidential reference may be sought for GST
After working for months on Constitutional amendments for introducing the Goods and Services Tax (GST), the Centre is now likely to make a Presidential reference to the Supreme Court for it as no consensus seems to be emerging among the states and the Centre on the issue. Under Article 143 of the Constitution, the President may seek the advice of the Supreme Court on any question of law or fact which is of such public importance that it is expedient to obtain the opinion of the Supreme Court on it. The Supreme Court after such a hearing, as it thinks fit, reports its opinion to the President.
“The Centre is planning to make a Presidential reference to the SC on the matter as the working group that was formed to work on the Constitutional amendments has not been able to work out a solution acceptable to both the centre and the states,” sources told The Indian Express. A joint working group was constituted on September 30, comprising officials of the central and state governments, to prepare the draft legislation for the Constitutional amendment.
This will delay the GST roll-out further even as Asim Dasgupta, chairman of the Empowered Committee of State Finance Ministers, has already said the new indirect tax regime would not be introduced as scheduled, from April 1 this year. The centre and the states have been locking horns over the amendments, which is the first step towards the implementation of the new indirect tax regime meant to subsume all central and tax levies and reduce the cascading effects of taxes.
Contentious issues such as placing the GST under the concurrent list or in the combined list of the centre and the states still stand unresolved. There are two provisions for the introduction of the GST under the Constitution. One is to put it both under the states and the centre, where the central law prevails over the states. The other is to put it under the concurrent list.
Indian Expresss, New Delhi, 9-02-2010.
Refer:
http://www.pmandassociates.in/otherpagetheme5.aspx?PAGENAME=Presidential%20reference%20may%20be%20sought%20for%20GST&CompanyID=0
“The Centre is planning to make a Presidential reference to the SC on the matter as the working group that was formed to work on the Constitutional amendments has not been able to work out a solution acceptable to both the centre and the states,” sources told The Indian Express. A joint working group was constituted on September 30, comprising officials of the central and state governments, to prepare the draft legislation for the Constitutional amendment.
This will delay the GST roll-out further even as Asim Dasgupta, chairman of the Empowered Committee of State Finance Ministers, has already said the new indirect tax regime would not be introduced as scheduled, from April 1 this year. The centre and the states have been locking horns over the amendments, which is the first step towards the implementation of the new indirect tax regime meant to subsume all central and tax levies and reduce the cascading effects of taxes.
Contentious issues such as placing the GST under the concurrent list or in the combined list of the centre and the states still stand unresolved. There are two provisions for the introduction of the GST under the Constitution. One is to put it both under the states and the centre, where the central law prevails over the states. The other is to put it under the concurrent list.
Indian Expresss, New Delhi, 9-02-2010.
Refer:
http://www.pmandassociates.in/otherpagetheme5.aspx?PAGENAME=Presidential%20reference%20may%20be%20sought%20for%20GST&CompanyID=0
GST rollout to miss April deadline
The UPA government’s proposed comprehensive indirect tax reform, goods and services tax (GST), will miss its scheduled rollout from April 1, 2010, a temporary setback to creation of a unified national market for goods and services in the country, but experts say this will give more time to the centre and states to prepare a more robust framework. “Because of the difficulties in passing the required constitutional amendment bill in the budget session , it will not be practical to introduce GST on April 1, 2010 . New dates for GST implementation will be decided in April” , chairman of the empowered committee of state finance ministers and West Bengal finance minister Asim Dasgupta told reporters after an hour-long meeting of the panel with the union finance minister Pranab Mukherjee on Thursday.
The GST, which is a consumption tax, seeks to create a seamless pan-India market with both manufacturers and service providers having the right to adjust taxes paid on inputs sourced from another state. Finance minister Pranab Mukherjee had in October at a summit in the capital city hinted at a delay of few months in implementation of the proposed tax, but later maintained that efforts were on to keep the schedule. Mr Dasgupta’s admission is a clear indication that the implementation of the new regime may be postponed by an year to April 1, 2011, as a number of states may not be willing for even a mid-year roll-out . Even tax experts agree that it was better to delay the launch and come out with a good product than hurry with a patchwork complicated structure . “This will give time to prepare a flawless model” , said R Muralidharan , executive director, PwC However, Pratik Jain, executive director, KPMG, wanted the government to provide a clear roadmap . “This (missing the deadline) has not come as a surprise. This will give time for preparation but we now need to have a clear roadmap in place,” he said.
The centre and states are still debating some of the crucial elements of the new tax structure such as the rates, items that will be taxed and exempted , turnover threshold the most crucial aspect in any tax structure. The center has pitched for a single rate structure and a uniform turnover threshold of Rs 10 lakh an-annually . The empowered committee has on the other hand suggested two rate structure and lower turnover threshold for state level GST and higher turnover of Rs 1.5 crore for central GST. The legislative measures for the new tax regime will also require further time. CAUSE & EFFECT More time for preparation . A more robust tax structure taking into account concerns of all stakeholders A premature roll out without proper readiness would have led to chaos causing hardship to industry But, industry will have to bear with the cascading tax structure for some more time.
Economic Times, New Delhi, 29-01-2010.
Economic Times, New Delhi, 29-01-2010.
For more details, refer:
Rs 50,000-cr fund to aid GST planned
The Centre is likely to announce a string of measures including a Rs. 50,000-crore compensation fund as incentives for state governments to switch to a nationwide goods and services tax (GST) regime.
The new regime, billed as the most ambitious tax reform initiative to be undertaken in the country, is aimed at removing distortions in the indirect tax framework that is currently mired in a web of levies such as excise, value added tax and service tax, besides various surcharges, octroi and cess payments.
The government is targetting to roll out GST from October 1, 2010 although contentious issues remain to be ironed out, especially on specific tax rates.
The proposed system can dramatically alter the tax administration by giving a one-shot solution to a welter of levies. However, its implementation faces political hurdles as it could rob state governments of discretionary fiscal powers that they have enjoyed for decades.
Government sources, who did not wish to be identified, indicated that the Centre is planning to set up a GST compensation fund of about Rs 50,000 crore to assure states that the Centre’s budget will help offset any revenue loss to states arising out of their migration to the new regime.
“The fund would be set up for five years, with the Centre assuring a compensation of Rs 10,000 crore every year to states for any loss in revenue,” an official said.
This fund will be administered by a council of finance ministers and will have the powers to monitor the implementation of the GST and penalise states that deviate from the agreed plan.
The intended corpus is higher than the Rs 30,000 crore corpus recommended by a task force of the 13th Finance Commission.
The panel has recommended two GST rates. The rates are yet to be firmed up.
Hindustan Times, New Delhi, 22-02-2010
The new regime, billed as the most ambitious tax reform initiative to be undertaken in the country, is aimed at removing distortions in the indirect tax framework that is currently mired in a web of levies such as excise, value added tax and service tax, besides various surcharges, octroi and cess payments.
The government is targetting to roll out GST from October 1, 2010 although contentious issues remain to be ironed out, especially on specific tax rates.
The proposed system can dramatically alter the tax administration by giving a one-shot solution to a welter of levies. However, its implementation faces political hurdles as it could rob state governments of discretionary fiscal powers that they have enjoyed for decades.
Government sources, who did not wish to be identified, indicated that the Centre is planning to set up a GST compensation fund of about Rs 50,000 crore to assure states that the Centre’s budget will help offset any revenue loss to states arising out of their migration to the new regime.
“The fund would be set up for five years, with the Centre assuring a compensation of Rs 10,000 crore every year to states for any loss in revenue,” an official said.
This fund will be administered by a council of finance ministers and will have the powers to monitor the implementation of the GST and penalise states that deviate from the agreed plan.
The intended corpus is higher than the Rs 30,000 crore corpus recommended by a task force of the 13th Finance Commission.
The panel has recommended two GST rates. The rates are yet to be firmed up.
Hindustan Times, New Delhi, 22-02-2010
Impact of GST on retail should be examined
Modern trade or organised retailing is emerging as an accepted and preferred model for doing business in India as they offer increased product choice - all under one roof, enhanced shopping experience as well as value for money. Introduction of Goods and Services Tax (GST) in India is a certainty and its impact on the retail sector is equally crucial to examine. It is believed that traders, including retailers, would be one of the biggest beneficiaries of this harmonised system of taxation. Although retail sector has succeeded in evolving as an organised revenue generating sector, it still continues to be fraught with some inherent challenges posed by the current indirect tax regime.
CENVAT credit of input taxes—Inability to offset the input excise duty (on procurement of goods) and service tax (on procurement of services viz rentals, freight, advertisement, other business related services) against the output tax (possible only value added tax), leads to cascading of taxes. Given that the output VAT can be (currently) discharged only through utilising the input VAT, the input service tax (largely on account of rentals) becomes a cost in the system. The ability to pass on this additional cost to the final consumers depends on market dynamics and therefore, may lead to reduction in margins. This issue of inability to offset the input taxes should get resolved once GST is introduced in India. This is for the reason that under GST, in the form in which it is currently contemplated, taxes on services would be available for set off against taxes on goods, (albeit cross credit between Central GST and State GST is not envisaged).
Even in case of retailers involved in provision of services, the quantum of input service tax credit (under the CENVAT credit regulations) available is unclear, since the regulation recognizes only manufactures and service providers (and not traders!). It is expected that GST would remove this anomaly since the taxable event for levy of GST would shift to 'sale of goods' from the current 'manufacture of goods', resulting in re-design of input credit regulations to include any buy-sell arrangement.
Lack of uniformity in State VAT laws - Another challenge currently faced by retail stores pertains to State VAT laws. The lack of uniformity in these laws with respect to rates of taxes, threshold limits, compliance requirements, etc lead to unnecessary compliance burden on the retailers The levy of entry tax without the ability to offset against output VAT adds to the tax burden. It is expected that introduction of GST would address these issues since the 'First Discussion Paper on Goods and Services Tax in India' released on November 10, 2009 has, inter alia, proposed that the basis of classification would be uniform across all States (as far as practicable) and that all taxes and levies that are on supply of goods / services should be subsumed in GST.
Supply chain strategy—Warehousing/ logistics/ distribution are some other key areas that would be directly impacted on introduction of GST. Given the fragmented VAT model and the complexities revolving around issuance of declaration forms/ different tax rates/ state-level compliances, inventory and distribution decisions are based on tax efficiency rather than operational efficiencies. It is currently observed that most companies prefer to maintain decentralised warehouses across states to avoid sunk cost of central sales tax, which leads to high operational costs. Movement of input credits across state borders under the GST regime (through IGST or any other equivalent model) would facilitate investment decisions being made purely on economic concerns, independent of tax considerations.
Credit of duties paid on imports - Further, a significant boost under GST for trader-importers would be availability of countervailing duty of customs (CVD) and additional customs duty (ACD) as input credit. Currently, CVD is a cost for the trader-importer whereas ACD is available only through refund mechanism. Going forward, CVD and ACD, if subsumed under GST, would be available as credit in the value chain. This would result in savings in cost leading to enhanced margins or reduction in ultimate selling price of goods.
To summarise, introduction of GST would benefit the retail trade in India to a great extent in the form of release of blocked input taxes, ability to take business decisions based on commercial considerations, rationalisation of prices and reduction of state level compliances. Overall, the organised retail sector will be impacted (positively) with the proposed introduction of GST and the players should be mindful and prepared to reap the benefits.
www.financialexpress.com
CENVAT credit of input taxes—Inability to offset the input excise duty (on procurement of goods) and service tax (on procurement of services viz rentals, freight, advertisement, other business related services) against the output tax (possible only value added tax), leads to cascading of taxes. Given that the output VAT can be (currently) discharged only through utilising the input VAT, the input service tax (largely on account of rentals) becomes a cost in the system. The ability to pass on this additional cost to the final consumers depends on market dynamics and therefore, may lead to reduction in margins. This issue of inability to offset the input taxes should get resolved once GST is introduced in India. This is for the reason that under GST, in the form in which it is currently contemplated, taxes on services would be available for set off against taxes on goods, (albeit cross credit between Central GST and State GST is not envisaged).
Even in case of retailers involved in provision of services, the quantum of input service tax credit (under the CENVAT credit regulations) available is unclear, since the regulation recognizes only manufactures and service providers (and not traders!). It is expected that GST would remove this anomaly since the taxable event for levy of GST would shift to 'sale of goods' from the current 'manufacture of goods', resulting in re-design of input credit regulations to include any buy-sell arrangement.
Lack of uniformity in State VAT laws - Another challenge currently faced by retail stores pertains to State VAT laws. The lack of uniformity in these laws with respect to rates of taxes, threshold limits, compliance requirements, etc lead to unnecessary compliance burden on the retailers The levy of entry tax without the ability to offset against output VAT adds to the tax burden. It is expected that introduction of GST would address these issues since the 'First Discussion Paper on Goods and Services Tax in India' released on November 10, 2009 has, inter alia, proposed that the basis of classification would be uniform across all States (as far as practicable) and that all taxes and levies that are on supply of goods / services should be subsumed in GST.
Supply chain strategy—Warehousing/ logistics/ distribution are some other key areas that would be directly impacted on introduction of GST. Given the fragmented VAT model and the complexities revolving around issuance of declaration forms/ different tax rates/ state-level compliances, inventory and distribution decisions are based on tax efficiency rather than operational efficiencies. It is currently observed that most companies prefer to maintain decentralised warehouses across states to avoid sunk cost of central sales tax, which leads to high operational costs. Movement of input credits across state borders under the GST regime (through IGST or any other equivalent model) would facilitate investment decisions being made purely on economic concerns, independent of tax considerations.
Credit of duties paid on imports - Further, a significant boost under GST for trader-importers would be availability of countervailing duty of customs (CVD) and additional customs duty (ACD) as input credit. Currently, CVD is a cost for the trader-importer whereas ACD is available only through refund mechanism. Going forward, CVD and ACD, if subsumed under GST, would be available as credit in the value chain. This would result in savings in cost leading to enhanced margins or reduction in ultimate selling price of goods.
To summarise, introduction of GST would benefit the retail trade in India to a great extent in the form of release of blocked input taxes, ability to take business decisions based on commercial considerations, rationalisation of prices and reduction of state level compliances. Overall, the organised retail sector will be impacted (positively) with the proposed introduction of GST and the players should be mindful and prepared to reap the benefits.
www.financialexpress.com
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