Summary of Major Changes in MVAT, Stamp Duty and State Excise

Maharashtra Budget 2011- Summary of Major Changes in MVAT, Stamp Duty and State Excise Duty

1.0       Introduction: - Maharashtra Deputy Chief Minister presented the State budget for the year 2011-12 on 23 March 2011. The changes effected in various regulations shall be effective from a date to be notified unless otherwise specified.  Considering a satisfactory rise in the sales tax revenue by 26% over earlier year, it is proposed to retain VAT rate on goods covered under schedule E @ 12.5%.  The budget proposes certain amendments under the Maharashtra Value Added Tax Act, 2002 (MVAT Act) in respect of the following, which will be notified in due course.

• Revised returns
• Providing for deposit instead of advance payment for voluntary registration
• Changes to the periods for grant of refunds
• Changes to the provision for refund applications to be filed by dealers making interstate sales
• Defining ‘exporter’ for the purpose of section 51
• Providing for penalty for knowingly failing to file complete audit report

2.0       Maharashtra Value Added Tax Act, 2002 (MVAT Act, 2002)

2.1  Proposal to Extend the Existing Tax Exemption / Concession till 31 March 2012 In Respect Of Following Goods

2.2 Proposal to Reduce Rate of Tax on Following Goods

2.3 Proposal to Increase Rate of Tax on Following Goods

2.4 Proposal To Grant Exemption On Following Goods

• Prefabricated Domestic Biogas Units
• Cinematographic copyrights for exhibition in theatres
• Ral (similar to Dhoop, Loban and Agarbatti)

2.5       Tax On Sale Of Telecasting Rights

It is proposed to tax telecasting rights of various entertainment and sports events @ 5%, by including the same in the list of intangible goods.

2.6       Turnover Limit Of Composition For Small Bakery Raised

Presently, small bakeries with turnover upto30 lacs can avail composition scheme. Considering the increase in general price levels, this turnover limit is proposed to be raised from30 lacs to50 lacs.

2.7       Tax On Liquor Other Than Wine

First Point Levy- With Set Off

−          It is proposed to levy tax at first point (on manufacturer or importer) @ 50 % of actual sale price of liquor or @ 25% of Maximum Retail Price (MRP), whichever is lesser.

−   Set-off will be available to the manufacturers.

Subsequent Sale- No Set Off

−    Tax rate @ 20 % shall be charged on actual sales in hotels of 4 star category and above.

−          In other cases, i.e. hotels below 4 star category, bars & restaurants and clubs, the rate of tax shall be 5%.

−          No Set-off will be available to these bars, clubs, hotels and restaurants.

2.8       Relief To Retailers In Composition Scheme

Retailers under composition scheme were required to have 50% of turnover of commodities liable to tax @ 4% in order to avail concessional composition rate. With general increase in base rate tax from 4% to 5%, the rate 4% mentioned in composition scheme is now being made 5%. This will enable retailers to avail the concessional rate of 5% under the composition scheme.

2.9              Relief to Sugar Factories

• Sugarcane Purchase Tax is payable by a sugar factory during the crushing season, which is normally paid out of loans raised as working capital.
• To avoid hardships to such factories Sugarcane Purchase Tax is proposed to be collected out of the sale proceeds from sugar at a prescribed rate and balance amount, if any, shall be payable as per last return for September.
• Excess, if any, shall be refunded to the factory.
• Interest and penalty in respect of sugar factories with negative net worth who have not crushed cane in previous 3 crushing seasons will be waived, if the sugarcane purchase tax and sales tax is paid immediately. This scheme shall be operative for a period of 1 year starting from 1 April 2011.

2.10     No Tax on Fabrics and Sugar

Due to changes in the Additional Duties of Excise in the recent Budget of Central Government, Fabrics and Sugar which are in the list of tax-free goods will become taxable. However, the State budget proposes to keep these goods as tax-free.

2.11     Waiver of Interest and Penalty to Soap Industry Certified By Khadi &   

           Village Industry Board

• It is proposed to waive the interest and penalty on tax leviable on turnover upto20 lacs every year, for period from 1 April 2005 to 31 March 2010 in respect of handmade soaps manufactured by such units.
• The industry, however, will have to deposit the entire tax amount by 30 September 2011 to avail this benefit.

2.12     Stern Action against Hawala Dealers

Dealers issuing / procuring false invoices or those making false claims would be punished with imprisonment of 1 year which can extend to 2 years on conviction.

 3.0 BOMBAY STAMP ACT, 1958

3.1 Amendments to Stamp Duty on Stocks and Capital Market

It is proposed to charge a uniform stamp duty of 0.005% on all the transactions of securities, futures, delivery and non-delivery based transactions for clients as well as on own account.

3.2 Stamp Duty on Market Value of Transfer of Tenancy Rights

In order to reflect the true value of the transfer of long held tenancy rights of house properties at prime locations, it is proposed that these transactions will now be liable for stamp duty at their market value.

 4.0 STATE EXCISE DUTY

Increase in the State Excise Duty In Case Of Liquor, etc.