VAT DETAILS
This query is : Resolved
15 October 2009
WHAT IS THE VAT
PLS DETAILS EXPLAIN
PLS DETAILS EXPLAIN
15 October 2009
PLS STEP BY STEP VAT TAX EXPLAIN
15 October 2009
What is VAT
Value Added Tax is a multi point sales tax with set off for tax paid on purchases. It is basically a tax on the value addition on the product. The burden of tax is ultimately born by the consumer of goods. In many aspects it is equivalent to last point sales tax. It can also be called as a multi point sales tax levied as a proportion of Valued Added.
State Value Added Tax.
The discussion regarding the VAT and the implementation which is being planned is only confined to the State. There is no proposed Central VAT at present in the time frame of 1.4.2003. All the States are drafting their separate Value Added Tax Act and as per the present position, every States will have a separate VAT Act with different provision not corresponding with each other. It can be stated that the proposed VAT Act is the primary stage of VAT.
It is proposed that there would be Two tax rate slabs on which tax would be levied. The first one would be 4% and would covered all essential items. The second one is 10% and all luxury items would be covered. In addition special rate slabs are also proposed which are 1% for bullion and jewellery, 20% for Non Essential Goods and exemption to certain goods like agricultural produce etc. Petroleum products are not included in VAT rates. Separate rate would be notified for them.
Set off. ( Input Credit ): At present the set off would be available on the goods locally purchased within the State only. No set off would be available to the goods purchased in the course of inter state trade and commerce. It will be necessary to produce the tax invoice to claim set off. The tax should have been charged in the invoice.
Exempted Goods: Some goods would be declared as exempted by the State Government under the proposed VAT Act. However the present view as per guide lines issued by the State Government are that no set off would be allowed on the exempted goods. It means that the tax suffered on the raw material for manufacture of exempted goods would not be refunded
Manufacturer: The manufacturer would be required to purchase raw material after paying full tax on the rate applicable on such material. Unlike the present system wherein the manufacturer can purchase the goods at a concessional rate of tax against declaration form no declaration form will be required to be issued by the Manufacturer. The input tax suffered by him would be adjusted \ set off from the sale of the finished product. The tax adjustment of input credit of the goods purchased within the State would be available on the sales made within the State and also on the inter state sales subject to the tax payable. No adjustment would be available of the input credit in case of branch transfer, consignment sale.
Trader: The trader would be required to collect tax on the sales made by him and the tax liability would be set off \ adjusted from the purchase \ input tax credit of the goods locally purchased in that State.
Issue of Invoice: Under the proposed Value Added Tax Act issue of invoice would be mandatory. No set off \ input credit would be allowed unless the original tax invoice is produced wherein tax is clearly charged separately in the invoice.
Declaration Form: Use of declaration form of purchase of goods on concessional rate of tax or NIL rate of tax under the State Act would be completely finished. There would be no requirement of declaration form under the proposed Value Added Tax. However the Road Permits like ST 18 A and ST 18 C declaration forms would continue. Declarations forms of CST Act would also continue
Accounting: The basic account books required for the purpose of VAT Act are Purchase and Sale Register. Both the registers would be the basis on which the calculation of payment of tax would be made. The normal practice of entering the gross value of Purchase bill would be changed. The assessee would be required to enter the value of goods in the goods A\c and the amount of tax in the Tax A\c separately.
Stocks: Stock statement are required to be furnished as prescribed for the quarter ending and then monthly from January to March . Set off of tax paid stocks would be given. Tax paid stocks as on march ending would be the basis for claiming set of under the new VAT Act. However, no set off would be available for the tax paid stock purchased prior to 1.4.2005.
Capital Goods: Set off would also be available on the tax paid goods at the time of purchase of capital goods under the VAT Act. Basis of set off is yet to be declared. However, it is presumed that set off would be available within a span of 3 years from the date of commercial production.
Export: Export would be zero rated. Tax paid on raw material used in manufacture of goods for export would be refunded by the State Government in cash \ adjustment. The exports would became more competitive in the world market as there would be no tax henceforth on raw material used for manufacture of goods for export.
Value Added Tax is a multi point sales tax with set off for tax paid on purchases. It is basically a tax on the value addition on the product. The burden of tax is ultimately born by the consumer of goods. In many aspects it is equivalent to last point sales tax. It can also be called as a multi point sales tax levied as a proportion of Valued Added.
State Value Added Tax.
The discussion regarding the VAT and the implementation which is being planned is only confined to the State. There is no proposed Central VAT at present in the time frame of 1.4.2003. All the States are drafting their separate Value Added Tax Act and as per the present position, every States will have a separate VAT Act with different provision not corresponding with each other. It can be stated that the proposed VAT Act is the primary stage of VAT.
It is proposed that there would be Two tax rate slabs on which tax would be levied. The first one would be 4% and would covered all essential items. The second one is 10% and all luxury items would be covered. In addition special rate slabs are also proposed which are 1% for bullion and jewellery, 20% for Non Essential Goods and exemption to certain goods like agricultural produce etc. Petroleum products are not included in VAT rates. Separate rate would be notified for them.
Set off. ( Input Credit ): At present the set off would be available on the goods locally purchased within the State only. No set off would be available to the goods purchased in the course of inter state trade and commerce. It will be necessary to produce the tax invoice to claim set off. The tax should have been charged in the invoice.
Exempted Goods: Some goods would be declared as exempted by the State Government under the proposed VAT Act. However the present view as per guide lines issued by the State Government are that no set off would be allowed on the exempted goods. It means that the tax suffered on the raw material for manufacture of exempted goods would not be refunded
Manufacturer: The manufacturer would be required to purchase raw material after paying full tax on the rate applicable on such material. Unlike the present system wherein the manufacturer can purchase the goods at a concessional rate of tax against declaration form no declaration form will be required to be issued by the Manufacturer. The input tax suffered by him would be adjusted \ set off from the sale of the finished product. The tax adjustment of input credit of the goods purchased within the State would be available on the sales made within the State and also on the inter state sales subject to the tax payable. No adjustment would be available of the input credit in case of branch transfer, consignment sale.
Trader: The trader would be required to collect tax on the sales made by him and the tax liability would be set off \ adjusted from the purchase \ input tax credit of the goods locally purchased in that State.
Issue of Invoice: Under the proposed Value Added Tax Act issue of invoice would be mandatory. No set off \ input credit would be allowed unless the original tax invoice is produced wherein tax is clearly charged separately in the invoice.
Declaration Form: Use of declaration form of purchase of goods on concessional rate of tax or NIL rate of tax under the State Act would be completely finished. There would be no requirement of declaration form under the proposed Value Added Tax. However the Road Permits like ST 18 A and ST 18 C declaration forms would continue. Declarations forms of CST Act would also continue
Accounting: The basic account books required for the purpose of VAT Act are Purchase and Sale Register. Both the registers would be the basis on which the calculation of payment of tax would be made. The normal practice of entering the gross value of Purchase bill would be changed. The assessee would be required to enter the value of goods in the goods A\c and the amount of tax in the Tax A\c separately.
Stocks: Stock statement are required to be furnished as prescribed for the quarter ending and then monthly from January to March . Set off of tax paid stocks would be given. Tax paid stocks as on march ending would be the basis for claiming set of under the new VAT Act. However, no set off would be available for the tax paid stock purchased prior to 1.4.2005.
Capital Goods: Set off would also be available on the tax paid goods at the time of purchase of capital goods under the VAT Act. Basis of set off is yet to be declared. However, it is presumed that set off would be available within a span of 3 years from the date of commercial production.
Export: Export would be zero rated. Tax paid on raw material used in manufacture of goods for export would be refunded by the State Government in cash \ adjustment. The exports would became more competitive in the world market as there would be no tax henceforth on raw material used for manufacture of goods for export.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- RCM INVOICING FROM NOV-2024
- Confusion around Form 26QB fields
- Tds on building rent monthly
- Sale of property furniture sale
- Applicability of Tax audit u/s 44AB of income tax act, 1961
- Question about eligibility for tax rebate u/s 87A
- Clarification on Documentation of Paid-Up Capital Contribution by Directors
- BUYING PROPERTY COULD NOT FILE 26QB
- Gst input for FY 23-24
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- GST Regis.
- IGST Credit-Show cause notice issued-confusion
Trending Online Classes
CAclubindia
