Mvat audit & interest

This query is : Resolved

Sunny Vaswani (Querist)
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10 October 2013 I am into film industry major role is of Services , but there is huge asset sale cross ing 1cr rupees , & my company is already registered with MVAT whether VAT audit is applicable to my company & it has different locations???

what is the interest rate for delay payment of MVAT liability ??? is it on day basis or month basis??

Sunny Vaswani

Sunny Vaswani (Querist)
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10 October 2013 It is registered under Service Tax as VIDEO Tape Production

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 ### **1. MVAT Audit Applicability**

In Maharashtra, MVAT audit requirements and applicability are determined by the turnover and nature of transactions. Here’s a summary related to your query:

#### **MVAT Audit Applicability:**

1. **Turnover Threshold:**
- If your company’s annual turnover exceeds ₹1 crore in the previous financial year, then VAT audit is mandatory under the Maharashtra Value Added Tax Act, 2002.
- Since your company has a huge asset sale crossing ₹1 crore, you likely fall under this threshold.

2. **Nature of Transactions:**
- Even if your business is primarily service-oriented, the audit requirements may still apply if you exceed the turnover limit.
- The asset sale you mentioned, which exceeds ₹1 crore, could contribute significantly to your turnover, thereby triggering the audit requirement.

3. **Different Locations:**
- If your company operates in multiple locations with different VAT registration numbers, each location may require separate audit compliance.
- Ensure that VAT compliance is maintained for each location as per the regulations.

4. **MVAT Audit Procedure:**
- The VAT audit will be conducted by a Chartered Accountant (CA) who will review your books of accounts, VAT returns, and other related documents.
- Ensure that you maintain detailed records and documentation to facilitate the audit process.

### **2. Interest on Delay in MVAT Payment**

Interest on delayed payment of MVAT is calculated as follows:

#### **Interest Rate and Calculation:**

1. **Interest Rate:**
- The interest rate for delayed payment of MVAT is generally 1.5% per month or part thereof.
- This rate can vary based on specific provisions or notifications issued by the Maharashtra VAT authorities.

2. **Calculation Basis:**
- **Daily Basis:** Interest is calculated on a daily basis for the period of delay. If the payment is delayed, interest accrues for each day the payment is overdue.
- **Monthly Basis:** The interest is computed monthly, but if the delay includes part of a month, it will be calculated for that month as well.

3. **Example Calculation:**
- If your MVAT liability was due on January 15th, but you paid it on February 15th, you would calculate interest for the 30 days of delay (assuming 1.5% per month interest rate).
- **Formula:** Interest = Principal Amount × Rate of Interest × Number of Months/Days of Delay

4. **Payment and Compliance:**
- It is crucial to make timely payments and file returns to avoid accruing interest and penalties.
- Regularly review your payment schedules and ensure compliance with MVAT regulations.

### **Additional Considerations:**

- **Consult a Tax Professional:** Given the complexities involved, it is advisable to consult a tax professional or Chartered Accountant who can provide specific advice based on your company’s financials and operations.
- **Maintain Records:** Keep accurate records of all transactions, asset sales, and payments to facilitate smooth audits and avoid discrepancies.
- **Review Notifications:** Stay updated with notifications from the Maharashtra VAT authorities for any changes in interest rates or compliance requirements.

By adhering to these guidelines, you can ensure compliance with MVAT regulations and manage your tax liabilities effectively.

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