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A query

krina (student) (1263 Points)

29 September 2012

Hello evryone ..

can some one please explain me the concept on MVAT

thanks in advance..

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CA Manish (Job) (5264 Points)
Replied 29 September 2012

Maharashtra Value Added Tax (MVAT):

Basics of MVAT -:

Basics of MVAT - MVAT or Maharashtra Value Added Tax was started w.e.f. 1 st April, 2005 It is administered by Sales Tax Department under Finance Department of Mantralaya. Based on the principal of VAT.

Whether MVAT is another type of Tax?

Whether MVAT is another type of Tax? No, it has replaced following four existing taxes· The Bombay Sales Tax Act, 1959· The Maharashtra Sales Tax on the Transfer of Right to Use Any Goods For Any Purpose Act, 1985· The Maharashtra Sales Tax on the Transfer of Property in Goods Involved in the Execution of Works Contract (re-enacted) Act, 1989· The Bombay Sales of Motor Spirit Taxation Act, 1958

Different businesses covered by MVAT - :

Different businesses covered by MVAT - VAT applies to all types of businesses including (1)Importers (2)Manufacturers (3)Distributors (4)Wholesalers (5)Retailers (6)Works Contractors (7)Lessors

Basic Methodology of MVAT -:

Basic Methodology of MVAT - All registered dealers, regardless of where they are in the chain of manufacture and production, must charge VAT on their sales of taxable goods and collect it from their customers. Registered dealers must issue a tax invoice to other registered dealers showing the VAT amount being charged as a separate amount. Registered dealers who pay VAT on their purchases can normally claim a “set-off” for the VAT paid to their suppliers. As a result, VAT is not a cost to the dealers. Dealers must ensure that tax is charged separately in their purchase invoice in order to be eligible to claim set-off. Certain dealers who sell mainly to consumers at retail level can opt for a simplified system of VAT calculation and payment under a Composition Scheme. Under the Composition Scheme, dealers will not issue a tax invoice or show VAT as a separate amount on a bill or cash memorandum.

Obligations under MVAT -:

Obligations under MVAT - Dealers who are required to be registered for VAT must – Charge and collect VAT on their sales of taxable goods Issue proper tax invoices Keep proper records and books of account Calculate the VAT due to Government based on VAT charged on sales LESS any VAT available as a set-off on business purchases File VAT returns on a regular basis declaring their VAT liability Pay any amount of VAT due to the Government with the VAT return

Rates of MVAT -:

Rates of MVAT –

A – 0% Vegetables, eggs, milk other essential items

B – 1% Precious Metals, Precious Stones and their Jewellery

C – 5% Raw Materials, Notified Industrial products, IT products

D – 20% & above Liquor, petrol & diesel

E – 12.5% All remaining items

Who should obtain registration -:

Who should obtain registration - Every dealer having turnover exceeding the prescribed threshold limit, must register with the Sales Tax Department. However, there are provisions for dealers to register voluntarily. Further, If you are registered under the Central Sales Tax Act, you must register for VAT, regardless of the threshold.

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