Vat-composition
This query is : Resolved
31 October 2013
UNDER DELHI VAT, KINDLY GUIDE
A) IS COMPOSITION SCHEME TO BE OPTED AT THE TIME OF REGISTRATION ITSELF ?
B)IF COMPOSITION SCHEME IS OPTED OR NOT OPTED , WHAT WILL BE THE TAXATION STRUCTURE?
C) WHAT VALUE OF THE TURNOVER, GOODS CAN BE PURCHASED FROM OUTSIDE DELHI, IF COMPOSITION SCHEME IS OPTED?
D) IF OUR EX DELHI PURCHASE IS ABOUT 30% VALUE OF TOTAL PURCHASE THEN WILL IT BE BENEFICIAL TO OPT FOR COMPOSITION SCHEME ?
A) IS COMPOSITION SCHEME TO BE OPTED AT THE TIME OF REGISTRATION ITSELF ?
B)IF COMPOSITION SCHEME IS OPTED OR NOT OPTED , WHAT WILL BE THE TAXATION STRUCTURE?
C) WHAT VALUE OF THE TURNOVER, GOODS CAN BE PURCHASED FROM OUTSIDE DELHI, IF COMPOSITION SCHEME IS OPTED?
D) IF OUR EX DELHI PURCHASE IS ABOUT 30% VALUE OF TOTAL PURCHASE THEN WILL IT BE BENEFICIAL TO OPT FOR COMPOSITION SCHEME ?
01 November 2013
1. you can opt for composition scheme at the time of registration
if not opted during the registration, you can opt by filling form on or before 15th of april
if not opted during the registration, you can opt by filling form on or before 15th of april
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01 November 2013
2. If you have opted for composition, then rate will fixed depending upon the turnover
if you have not opted for composition, then rate will be on the basis of commodity
if you have not opted for composition, then rate will be on the basis of commodity
01 November 2013
3. there is recent change in composition scheme, plz provide specific question for answer.
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01 November 2013
Small Dealer with annual gross turnover not exceeding Rs. 50Lakh who are otherwise liable to pay VAT, shall however have the option for a composition scheme with payment of tax at small percentage of gross turnover. The dealer option composition scheme will not be entitle to input credit.
Salient features of this Scheme :
Ø The benefit of this Scheme is available to Retailers only,
Ø Only Registered Dealers are covered by this Scheme, it means Composition scheme is not available to unregistered dealer (URD)
Ø The benefit of Composition Scheme is not available in respect of sales of —Motor Spirits, which are notified by the State Government u/s. 41(4) of MVAT Act, 2002,
Ø The benefit is also not available to those dealers whose turnover of sales has exceeded Rupees Fifty lakh in the previous year; the turnover limit of Rupees Fifty lakhs is applicable only on sales side and not on purchases side.
Ø This limit of turnover of sales is applicable qua dealer and not qua place of business. In other words the turnover limit is aggregate of turnover of sales of all the places of business of a dealer.
Ø Turnover of Sales/Purchases — As per column no. 3 of the said Notification, the Composition amount is payable on the excess of turnover of sales over the turnover of purchases determined as under —
Total turnover of sales/purchases made by a Retailer excluding the turnover of resales of the following goods :
a) Foreign Liquor,
b) Country Liquor,
c) Liquor Imported from outside India,
d) Drugs covered by Schedule Entry C-29 (for the period 01.04.2005 to 30.06.07) and
e) Motor spirits (as Notified u/s 41(4) of MVAT Act)
In this column, deduction is provided in respect of resales of liquor. However, if one reads clause (c) of sub-section 42(1), it specifically denies the Composi-tion Scheme to Liquor dealers. Thus, once the dealer has sold liquor etc., he will be out from claiming this Composition benefit by virtue of Section 42(1) (c) and as such, there is no need of providing any deduction to such dealers in respect of sales of liquor. Thus the deduction provided in the Notifi-cation is not consistent with Section 42(1) (c), thus either the Notification has to be amended or otherwise section 42(1) (c) should be amended accordingly.
Secondly benefit under this Composition Scheme was not available in respect of sales of drugs, for the period 01.04.2005 to 30.06.2007 because during this period, VAT was payable on Maximum Retail Price of the drug by the dealers. However, w.e.f. 01.07.2007 the said scheme of taxation was discontinued and consequential amendment has been made as a result of which amendment is also made in this notification. Accordingly, the Composition Scheme has also been made available to dealers in respect of sales of drugs.
Composition Amount
Under this Composition Scheme the registered dealer is required to pay Composition amount on six month basis
a) Calculation of Taxable Turnover
It is an excess of turnover of sales including tax-free goods over the turnover of purchases including tax-free goods.
In the first year of operation, dealer can claim the deduction under section 3(2) of MVAT Act, 2002 and only balance turnover shall be taken for calculation purposes.
Tax-free goods purchased may be from registered dealers or from un-registered dealers,
Taxable goods resold are those goods which are purchased from registered dealer only except purchased goods which are used for packing of goods resold. Thus, no deduction is available from the turnover of sales in respect of purchases of goods made from unregistered dealers.
Tax collected separately by the vendors shall form part of total turnover of purchases.
The turnover of purchases shall be reduced by the amount of every credit received by the claimant dealer from his vendor.
It is once again provided that the Turnover of Sales and Purchases shall not include the purchases and sales of liquor, motor spirits and drugs for certain period.
To give the deduction of opening Stock as on 01.04.2005 a special concession has been provided in respect of the six month period starting on 1st April, 2005. In such cases, the six monthly turnovers of sales have to be considered at 5/6th of such turnover, whereas the total turnover of purchases of six months was to be reduced from such turnover of sales.
Under Composition Scheme, a dealer cannot take credit of Input VAt
Salient features of this Scheme :
Ø The benefit of this Scheme is available to Retailers only,
Ø Only Registered Dealers are covered by this Scheme, it means Composition scheme is not available to unregistered dealer (URD)
Ø The benefit of Composition Scheme is not available in respect of sales of —Motor Spirits, which are notified by the State Government u/s. 41(4) of MVAT Act, 2002,
Ø The benefit is also not available to those dealers whose turnover of sales has exceeded Rupees Fifty lakh in the previous year; the turnover limit of Rupees Fifty lakhs is applicable only on sales side and not on purchases side.
Ø This limit of turnover of sales is applicable qua dealer and not qua place of business. In other words the turnover limit is aggregate of turnover of sales of all the places of business of a dealer.
Ø Turnover of Sales/Purchases — As per column no. 3 of the said Notification, the Composition amount is payable on the excess of turnover of sales over the turnover of purchases determined as under —
Total turnover of sales/purchases made by a Retailer excluding the turnover of resales of the following goods :
a) Foreign Liquor,
b) Country Liquor,
c) Liquor Imported from outside India,
d) Drugs covered by Schedule Entry C-29 (for the period 01.04.2005 to 30.06.07) and
e) Motor spirits (as Notified u/s 41(4) of MVAT Act)
In this column, deduction is provided in respect of resales of liquor. However, if one reads clause (c) of sub-section 42(1), it specifically denies the Composi-tion Scheme to Liquor dealers. Thus, once the dealer has sold liquor etc., he will be out from claiming this Composition benefit by virtue of Section 42(1) (c) and as such, there is no need of providing any deduction to such dealers in respect of sales of liquor. Thus the deduction provided in the Notifi-cation is not consistent with Section 42(1) (c), thus either the Notification has to be amended or otherwise section 42(1) (c) should be amended accordingly.
Secondly benefit under this Composition Scheme was not available in respect of sales of drugs, for the period 01.04.2005 to 30.06.2007 because during this period, VAT was payable on Maximum Retail Price of the drug by the dealers. However, w.e.f. 01.07.2007 the said scheme of taxation was discontinued and consequential amendment has been made as a result of which amendment is also made in this notification. Accordingly, the Composition Scheme has also been made available to dealers in respect of sales of drugs.
Composition Amount
Under this Composition Scheme the registered dealer is required to pay Composition amount on six month basis
a) Calculation of Taxable Turnover
It is an excess of turnover of sales including tax-free goods over the turnover of purchases including tax-free goods.
In the first year of operation, dealer can claim the deduction under section 3(2) of MVAT Act, 2002 and only balance turnover shall be taken for calculation purposes.
Tax-free goods purchased may be from registered dealers or from un-registered dealers,
Taxable goods resold are those goods which are purchased from registered dealer only except purchased goods which are used for packing of goods resold. Thus, no deduction is available from the turnover of sales in respect of purchases of goods made from unregistered dealers.
Tax collected separately by the vendors shall form part of total turnover of purchases.
The turnover of purchases shall be reduced by the amount of every credit received by the claimant dealer from his vendor.
It is once again provided that the Turnover of Sales and Purchases shall not include the purchases and sales of liquor, motor spirits and drugs for certain period.
To give the deduction of opening Stock as on 01.04.2005 a special concession has been provided in respect of the six month period starting on 1st April, 2005. In such cases, the six monthly turnovers of sales have to be considered at 5/6th of such turnover, whereas the total turnover of purchases of six months was to be reduced from such turnover of sales.
Under Composition Scheme, a dealer cannot take credit of Input VAt
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