amendment wef 01.04.10 by SabeerAli1

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									BRIEF AMENDMENT TO DVAT ACT, 2004 BY NOTIFICATION DTD. 01.04.10

 A)   Insertion of Rule 6A
      - Scope -            The provisions relating to tax credit have been changed. These changes are
          applicable w.e.f. 01.04.2010 i.e. from F.Y. 2010 – 2011. The main changes are as under:-
      1. Tax Credit under Sec 9(1) of the Act is to be allowed in proportion to the goods sold during
          the tax period.

         It means that the tax credit will be allowed only equivalent to tax paid on purchases which
         have been sold during the tax period. For example:- If goods worth Rs. 300/- have been
         purchased on which tax has been paid @5% i.e. Rs.15/- and out of these purchases, goods
         costing Rs. 100/- have been sold away for Rs. 150/- charging tax @5% i.e. Rs. 7.50, then on
         this sale, tax credit will be allowed only Rs. 5/- i.e. 5% of Rs. 100/- which is the cost of these
         purchases. It means that the balance tax of Rs. 2.50/- will have to be paid. Now, in this case,
         the tax credit of Rs. 10/- on unsold goods costing Rs. 200/- shall be carried forward and will
         be allowed in the tax period during which these goods are sold.

         Taking the above example, the tax credit of Rs. 10/- on the closing stock will be reversed at
         the end of tax period and will be taken as the opening tax credit for immediate succeeding tax
         period.

         Return form (DVAT – 16) has been amended for inserting these details.

      2. Now, for filing return form (DVAT – 16), you need to furnish following details:-
          Details of opening stock (as on first day of each tax period) showing opening stock
            available of different tax rates i.e. 1%, 5%, 12.5%, 20% etc.. etc…

             It may be in the following shape ;-
             Cost of opening stock        Rate of tax      Tax Credit available
             Rs. 1,00,000/-                 1%                    Rs. 1,000/-
             Rs. 2,00,000/-                 5%                    Rs. 10,000/-
             Rs. 3,00,000/-                                       Rs. 11,000/-

          Details of closing stock (as on the last day of each tax period) showing closing stock
           available of different tax rates i.e. 1%, 5%, 12.5%, 20% etc.. etc…

             It may be in the following shape ;-
             Cost of closing stock        Rate of tax      Tax Credit available
             Rs. 2,00,000/-                 1%                    Rs. 2,000/-
             Rs. 3,00,000/-                 5%                    Rs. 15,000/-
             Rs. 5,00,000/-                                       Rs. 17,000/-

          Details of purchases (during tax period) of different tax rates i.e. 1%, 5%, 12.5%, 20%
           etc.. etc…

             It may be in the following shape ;-
             Purchases Cost               Rate of tax               Tax Credit available
             Rs. 1,00,000/-                 1%                      Rs. 1,000/-
             Rs. 2,00,000/-                5%                       Rs. 10,000/-
             Rs. 5,00,000/-                 12.5%                   Rs. 62,500/-
             Rs. 1,50,000/-                 20%                     Rs. 30,000/-
             Rs. 9,50,000/-                                         Rs. 1,03,500/-

          Details of sales (during tax period) of different tax rates i.e. 1%, 5%, 12.5%, 20% etc..
           etc…
           It may be in the following shape ;-
           Sale Value                   Rate of tax              Tax payable
           Rs. 1,25,000/-                 5%                     Rs. 6,250/-
           Rs. 5,75,000/-                 12.5%                  Rs. 71,875/-
           Rs. 1,80,000/-                 20%                    Rs. 36,000/-
           Rs. 8,80,000/-                                        Rs. 1,14,125/-
                                                                                        Contd……2/-
                                                           -- 2 --

                     Annexure 2 A has been introduced. It will be attached with every return (DVAT – 16). It
                      contains monthwise partywise details of purchases and VAT made during the VAT
                      period. It means whether your tax period is monthly or quarterly or half yearly or yearly,
                      Annexure 2 A has to be prepared separately for each month. Further, monthwise
                      partywise means that for a single party from whom more then one purchases have been
                      made during the month, in Annexure 2 A, all purchases made from the said party during
                      the month shall be shown by way of a single insertion.

                        Annexure 2 A is attached below. It has to be filled by you and to be delivered in
                        duplicate at the time of giving details for furnishing the return. This Annexure 2 A will be
                        attached, as it is, alongwith return (DVAT – 16)

                                                                 ANEXURE 2 A
                                                               (See Insutruction 6)
                                                                                   TIN:-
                                                     NAME OF THE DEALER
                                                           ADDRESS
                                              TAX PERIOD FROM ________ TO ________
                                            SUMMARY OF PURCHASES (AS PER DVAT - 30)



                                  Purchases now eligible for credit of Input
                                                                                 Purchases eligible for credit of Input Tax
                                  Tax

S.           Seller's   Sellers
     Month
No            TIN       Address                           Purcha     Total                                             Total
                                  Import    Interstate    ses        purchas                                           purch
                                                                                                               Input
                                  from      purchases     from       es                              Rate of           ases
                                                                                 Local Purchass                Tax
                                  outside   or stock      exempt     includin                        Tax               (inclu
                                                                                                               paid
                                  India     transfers     ed         g tax, if                                         ding
                                                          units      any.                                              tax)

                                                                                 Capital
                                                                                 Goods     Others




                     Annexure 2 B has been introduced. It will be attached with every return (DVAT – 16). It
                      contains monthwise partywise details of sales and VAT made during the VAT period. It
                      means whether your tax period is monthly or quarterly or half yearly or yearly, Annexure
                      2 B has to be prepared separately for each month. Further, monthwise partywise means
                      that for a single party to whom more then one sales have been made during the month, in
                      Annexure 2 B, all sales made to the said party during the month shall be shown by way of
                      a single insertion.

                        Annexure 2 B is attached below. It has to be filled by you and to be delivered in
                        duplicate at the time of giving details for furnishing the return. This Annexure 2 B will be
                        attached, as it is, alongwith return (DVAT – 16).


                                                                                                               Contd……3/-
                                                       -- 3 --

                                                  ANEXURE 2 B
                                                (See Insutruction 6)
                                                                                               TIN:-
                                                    NAME OF THE DEALER
                                                          ADDRESS
                                             TAX PERIOD FROM ________ TO ________
                                              SUMMARY SALES (AS PER DVAT - 30)




                                  Inter                Inter State Sales                 Local Sales
                                  state
                                             Exports
S.           Buyer's    Buyer's   Branch/
     Month                                   out of
No           Name        TIN      Consign
                                             India                                       Sales
                                  ment                 Sale Price      Central
                                  Transfer                                               Price         Output   Total
                                                       (excluding      Sales     Total
                                                                                         (excluding    tax      Sales
                                                       CST)            Tax
                                                                                         tax)




                    DVAT – 30 (purchase register) (monthwise) has to be attached with each return. This
                     DVAT – 30 has to be prepared monthwise irrespective of tax period whether monthly or
                     quarterly etc.. etc..

                    DVAT – 31 (sale register) (monthwise) has to be attached with each return. This DVAT –
                     31 has to be prepared monthwise irrespective of tax period whether monthly or quarterly
                     etc.. etc..

               3. Some important points/ issues relating to these changes.
                  a.    In case of Inter State Sales and Export Sales, the tax rate is lesser or NIL. In case of
                        manufacturer, sometimes the purchases of raw material has higher rate of tax then the
                        rate of tax applicable on sale of final product. In such cases refund calculates. The
                        law relating to claim of refunds in such cases continues to be the same as in the past.

                   b.      In case, the goods are sold at a price lower then the price at which the same were
                           purchased and the sale is in the normal course of business, the excess tax credit will
                           be available for refund or adjustment against the tax liability of said tax period.
                           However, in case of receipt of credit note or discount or incentive etc. etc. received
                           from the seller of said goods, the tax relating to said discount / credit note amount
                           (etc..) shall be reversed in the tax period during which discount/ credit note etc. has
                           been received.

                   c.      In case, stock register, itemwise/ tax ratewise is not maintained, then how to compute
                           the closing stock figure at the end of every tax period is an issue.

                           The law is silent since it mandatorily provides for maintenance of stock register.
                           There are different opinions on this issue. However, as per the majority of opinion
                           this situation may be dealt with as under;-

                                                                                                       Contd……4/-
                                                                 -- 4 --

                                  In case of trading, separate trading account, for each tax period should be
                                   prepared showing purchases of a particular tax rate and sales of the same item
                                   and to apply the G.P. rate applicable, thus, calculate the balancing closing stock
                                   figure. For example:- Separate trading a/c for each tax period for purchases of
                                   1%, 5% etc.. etc.. should be prepared.

                                  In case of manufacturing, trading a/c of relevant input items and corresponding
                                   sales of finished goods may be prepared by applying average G.P. rate and the
                                   balancing closing stock figure may be further bifurcated by physical verification
                                   for knowing the different tax rate items available in the closing stock.

                                      However, to what extent these methods will be acceptable to the VAT Deptt. is
                                      again a big question mark.

                        d.       It is mandatory to maintain stock register as per Sec. 48 r/w Rule 42 (f) and (g). In
                                 case of non – maintenance of stock register, Sec. 86 (13) provides for levy of penalty
                                 of Rs. 50,000/-.

                        e.       The changes in tax rates of various items w.e..f 01.04.2010 are in the Schedules
                                 given below.

                                        Summary of Changes in Rate of Tax w.e.f. 01.04.2010

                                                    SCHEDULE -I

S.                                                        Pre         Amended
No                    Name Of Item                       Budget        Entry     Remarks
                                                                                 New entry no.76 inserted in First
1    Oral Iron Chelator Defarasirox                         -              Nil   Schedule

                                                                                 New entry no.77 inserted in First
2    Liquefied Petroleum Gas (LPG) for                    5%               Nil   Schedule
     domestic use                                                                (Necessary amendment made in
                                                                                 entry No.24 & 180 of Third Schedule)

                                                   SCHEDULE -III

1    Bio-Inputs Like bio-fertilizers                      Nil              5%    Entry no.73 of First Schedule
     micro-nutrients and plant growth                                            Shifted to entry no.188 of
     promoters                                                                   Third Schedule.

2    Kerosene-stoves, Lanterns and Petromax                nil             5%    Entry no.74 of First Schedule Shifted
     and their spares                                                            to Entry no.189 of Third Schedule

3    Fertilizers, Pesticides, Weedicides                  5%           12.50%    Omitted from Third schedule
     Insecticides, Herbicides, Rodenticides                                      (Entry No. 20 of 3rd Schedule)
     and Plant Growth Regulators (other
     than those covered in First schedule)

4    Plastic and Tin containers including                 5%           12.50%    Omitted from Third schedule
     barrels                                                                     (Entry No. 118 of 3rd Schedule)

5    House hold plastic items such as                     5%           12.50%    Omitted from Third schedule
     combs, jug, soap case, mug, tooth                                           (Entry No. 165 of 3rd Schedule)
     brush, patra, looking glass and photo
     frames, chakla belan, cutlery, tea
     and atta chhanani, lunch box, bottles,
     trays, tokras including baskets, mats
     basins, tubs, and drums of capacity
     upto 100 litres
                                                                                                                 Contd……4/-
                                                             -- 4 --


6    Fittings for door, window and furniture            5%         12.50%   Omitted from Third Schedule
     including(1)hinges-butt,piano, narrow,                                 (Entry No. 166 of 3rd Schedule)
     tee,parliament,handles for locks,furniture
     handles,furniture knobs,drawer channel
     furniture fitting,furniture hinges,furniture
     catchers,(2)nails,screws,nuts and bolts,
     revets,cotter pins,staples,panel pins,blue cut
     taks,hob nails, stars,studs,iron heels,bullock
     and horse shoes and nails,(3)chains of all
     kinds,(4) all kinds of metal sections,including
     slotted angles,shelves and accessories,(5)
     rods,rails,channels and curtain fittings,(6)
     tower bolts,handles, aldrops,window stay,gate
     hook,door stopper,brackets,card clamp,clips,
     corners,washers,eyelets,hooks and eyes
     hangers,hasps,pegs,pelmet fittings,sliding
     door fittings,stoppers,suspenders,springs,
     magic eyes,trolley wheels,pulleys and holdfasts,
     (7) wire brushes.

7    Paint Brushes                                      5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 168 of 3rd Schedule)

8    Wood, Timber, Ply-board and                        5%         12.50%   Omitted from Third Schedule
     laminated Board                                                        (Entry No. 169 of 3rd Schedule)

9    Tractor Tyres and tubes                            5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 171 of 3rd Schedule)

10   Wire mesh and metal mash                           5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 179 of 3rd Schedule)

11   Desi Ghee                                          5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 181 of 3rd Schedule)

12   Glucose D                                          5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 182 of 3rd Schedule)

13   Locks                                              5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 184 of 3rd Schedule)

14   Weights and measures                               5%         12.50%   Omitted from Third Schedule
                                                                            (Entry No. 185 of 3rd Schedule)

15   Fibre board and particle board                     5%         12.50%   Omitted from Third Schedule
     made out of agricultural wastes like                                   (Entry No. 186 of 3rd Schedule)
     Bagasse

16   Cutlery Items                                      5%         12.50%   Cutlery items deleted from Entry No. 6
                                                                            of third schedule

17   Mobile phone and all mobile                        5%         12.50%   Entry no 41 of third schedule amended
     accessories costing above                                              to exclude mobile phone and accessories
     rupees ten thousand                                                    costing above Rupees ten thousand

18   Invertors                                          5%         12.50%   Sl. No. 7 of Entry No. 41A of third
                                                                            schedule amended to exlude Invertors
                                                                                                         Contd……5/-
                                                                                                -- 5 --


19   Readymade garments costing                                                            5%         12.50%    Entry No. 57 of third schedule
     above rupees five thousand                                                                                 Amended to exclude readymade
                                                                                                                garments costing above Rs. 5000/-

20   Writing insturments costing above                                                     5%         12.50%    Entry No 76 of third Schedule amended
     one thousand per piece                                                                                     to exclude writing instruments costing
                                                                                                                above Rs. 1000/-

21   Magaz of all kinds, Kesar and                                                         5%         12.50%    Entry NO. 81 of third schedule
     Dryfruits                                                                                                  amended to exclude these items

                                                                                SCHEDULE -IV

                                                                                          12.50
1    Diesel                                                                                %          20.00%    Inserted in Fourth Schedule vide serial
                                                                                                                no 1 Entry No. (v)

                                                                                          12.50
2    Aerated Drinks                                                                        %              20%   Entry inserted at serial No. 11 of
                                                                                                                fourth schedule

                                                                                          12.50
3    Watches costing above rupees                                                          %              20%   Entry inserted at serial No. 12 of
     five thousand                                                                                              fourth schedule

     NOTE:-
     FOR ANY FURTHER CLARIFICATION, YOU MAY FEEL FREE TO DISCUSS (BY PERSONAL VISIT)
     TO SH. NAVEEN UPADHYAY / SH. J.M. TIWARI. HOWEVER, IN CASE OF FURTHER
     CLARIFICATION, YOU MAY SEEK APPOINTMENT WITH CA. SAURAV ROHATGI / CA. RAJ
     KUMAR.

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