GOA VAT LAW

Presented by Siddesh Chimulker Nishant Naique Akshay Patkar Vishnudas Shet Shawn Vaz 1025 1031 1037 1048 1057

BACKGROUND OF VAT

In the old sales tax structure there were problems of double taxation of commodities and multiplicity of taxes resulting in a cascading tax burden. For instance, i.e. First inputs are taxed and then after the commodity is produced with input tax load, output is taxed again. Thus, VAT is based on the value addition to the goods, and related VAT liability of the dealer is calculating by deducting input tax credit from tax collected on sales during the payment period.

EXAMPLE
VAT IS CALCULATED BY DEDUCTING TAX CREDIT FROM TAX COLLECTED DURING THE PAYMENT PERIOD

Particulars Purchase price Tax paid on purchases(i.e. Input tax ) at the rate (assumed) of 10 % Sale price Tax on sale price(i.e. output tax ) at the rate (assumed) of 12.5 % VAT payable (Rs. 22.5-10)

RS. 100 10 180 22.5 12.5

VAT CALCULATION EXAMPLE

Price without VAT Rs. Raw Materials supplied by P to X Ltd.(VAT charged by P @ 12.5%) Q to X Ltd. (VAT charged by Q @ 4%) Manufactured goods sold by X Ltd. To Y Ltd.(VAT charged by X Ltd. From Y Ltd. @ 12.5%) Less :- VAT credit available to X Ltd.(Rs. 125+240) Goods Sold by Wholesaler X Ltd. to Z Ltd.(retailer) (VAT charged by Y Ltd. from Z Ltd. @ 12.5%) Less : VAT credit available to Y Ltd. Goods Sold by RetailerZ to consumers (VAT charged by Z from consumers @ 12.5%) Less :- VAT credit available to Z. 1,000 6,000 10,000 Gross VAT Net VAT payable by dealer to the government Rs. 125 240

Rs. 1,25 240 1,250 365

885

17,000

2,125 1,250 875

22,000

2,750 2,125

625

VAT COLLECTED BY GOVERNMENT

Who will pay VAT to the Government P Q X Ltd. Y Ltd. Z ( Consumer) Total VAT collected by the government Rs. 125 240 885 875 625 2,750

Tax on Value added : VAT constitutes a method of taxing final consumer spending in the economy by installments or in stages. A method consists of levying a tax on value added to a product or service at each stage of production and distribution. Value added is taken as the difference between sales and purchases of intermediate products or goods sold for resale of business. This ensures that each input that goes into a final product is taxed once.

REGISTRATION OF DEALER
(i) A

dealer is required to register in the following circumstances: (a) When turnover exceed following limits: - Rs.10,000/- in case of non-resident dealer and casual trader. -Rs. 1,00,000/- in case of importer/manufacturers - Rs. 5,00,000/- in any other case. (b) when he is registered or liable under CST Act, 1956. (c) when a person succeeds business of a dealer due to death or transfer.

(ii) Application for registration in Form VAT-I should be filed within 30 days from date of commencement of liability and in case of succession within 60 days along with receipted challan for registration fees. Registration is valid for three financial years. (iii) A dealer can also apply for voluntarily registration along with registration fees and same is valid for one financial year. (iv) An employer whose liable to deduct tax at source from contract payments should apply for registration in form VAT-XXIV.

When the dealer is required to be registered the dealer should file an application for registration within 30 days from the date of commencement of liability.
Category 1 2 3 4 5 Turnover limit up to Rs 5 lakhs Turnover above Rs 5 lakhs and upto Rs 40 lakhs Exceeding Rs 40 lakhs but below 1 crores Rs 1 crores and above For Voluntary registration Registration fees Rs 1000 Rs 3000 Rs 5000 Rs 10000 Rs 2000

The registration certificate should be displayed at each place of business. If the registration certificate is lost, it can be obtained on payment of Rs 100 by way of receipted chalan. Every dealer who is having more than one place of business should nominate one of his business place as HO before the close of the year.

RENEWAL

All the dealers registered under the act are required to apply for renewal of registration certificate at least one month prior to expiry of the period specified in the certificate. Application for renewal should be submitted along with the registration certificate and chalan for payment of renewal fee. The registration certificate will be renewed by issue of a letter stating that the certificate is renewed for a specified period(3 years).

In case the renewal fees are paid in excess, the excess amt are adjusted against any dues payable by issue of a refund adjustment order and thereafter refunded by issue of refund voucher if the amt is more than 100 otherwise it shall be adjusted in subsequent years.

COMPOSITION SCHEME

Small dealers with annual gross turnover not exceeding a specified amount( Rs. 50 lakhs) who are liable to pay VAT, shall have composition scheme with payment of tax at a small percentage of gross turnover. The dealers opting for this composition scheme will not be entitled to input tax credit. Optional i.e. Exercised in writing for the entire year or part of the year in which he gets himself registered. He is not required to maintain any statutory records as prescribed. Only the records for purchases and sale inventory should be maintained.

AMENDMENT

1. 2. 3.

4. 5.

In the following cases a registered dealer should apply for amendment of registered certificate, by affixing court fee stamp of Rs 100. Change in the name of business. Changes or opens or closes any one of the business places. If there is a change in partners in a partnership firm or change in the constitution of the firm. Change in a trustee in a trust. Change in guardianship.

The AAA will return the registration certificate duly amended. The affectivity will be from the date of contingency which necessitated the amendment. Incase of merger or amalgamation of two or more companies, amendment will be effective from the date of such order. If the information relates to a branch situated outside the jurisdiction of AAA then a copy of information is forwarded to the AAA in whose jurisdiction the branch is situated

RATE OF TAX

Tax on turnover of sales is as follows:

1 2 3 4 5 6 7 Goods specified in Schedule A Goods specified in Schedule B Goods specified in Schedule C Goods specified in Schedule D Any goods For exporters Packing materials 1 paise in a rupee 4 paise in a rupee @ shown against each entry Nil tax 12.5 paise in a rupee Zero rate @ of tax payable onsales of goods packed

PAYMENT OF TAXES
The dealers are required to pay tax in challan Form VATV as under: (i) If monthly tax liability exceeds Rs. 1 lakh - within 20 days from end of the month. (ii) If monthly tax liability is less than Rs. 1 lakh - within 25 days from end of the month. (iii) Composition of tax within 30 days from end of the quarter.

FILING OF RETURNS
Returns are to be filed quarterly in Form VAT III (regular)/ VAT-IV (composition) within 30 days after end of the quarter along with receipted challans. A revised return can be filed within 1 year following the last date prescribed for furnishing original return or before issue of assessment notice, whichever is earlier.

INPUT TAX CREDIT IS AVAILABLE ON FOLLOWING:

(a) Goods purchased for packing taxable goods. (b) Purchase of raw materials for manufacture of taxable goods. (c) Purchase of capital goods used in manufacture of taxable goods. (d) Goods purchased for use in the execution of works contract. (e) Goods purchased for transfer under right to use. (f) Goods purchased for sale in the course of Inter-State Trade. (g) Goods purchased for sale in the course of export outside the territory of India. (h) Entry Tax paid on goods brought for use or consumption except on capital goods and item covered under Schedule G. In case of stock transfers, it will be in excess of 2%. (i)In excess of 2% tax paid on goods other than capital goods used in the manufacture or processing of finished goods, which are dispatched outside Goa on stock transfer. (j) In order to claim input tax credit purchases must be supported by Tax invoice, wherein tax element is shown separately.

INPUT TAX CREDIT IS NOT AVAILABLE ON FOLLOWING:

(a) Imported goods. (b) Inter-state purchases or purchases made from outside Goa. (c) Purchases of raw materials for manufacture of tax-free goods. (d) Purchases from unregistered dealers. (e) Purchase of goods for packing tax-free goods. (f) Purchase of goods specified in Schedule G. (g) Purchase of goods, which are not sold because of theft or destruction. (h) Taxable goods purchased from another registered dealer for resale but given away by way of samples or gifts. (i) Capital goods, industrial goods and packing materials covered under Schedule B utilized for the purpose other than covered in the prescribed declaration in Form VATXXX. (j) Goods purchased by a dealer, who has opted for composition of tax. (k) Capital goods purchased or paid before appointed date. (l) Capital expenditure incurred before the date of registration. (m) Capital goods used in the manufacture of tax-free goods. (n) Capital goods not connected with the business of the dealer.

NET TAX PAYABLE AND REFUND OF INPUT TAX CREDIT

Monthly net tax payable is difference between output tax payable on sale of goods after deducting eligible input tax credit on purchases. The excess input tax credit is required to be adjusted against tax payable under Goa Tax of Entry of Goods, 2000 or under Central Sales Tax Act, 1956. Input Tax credit remaining after adjustments can be carried over up to end of next financial year. The balance remaining input tax credit is refunded within 3 months from end of the respective year. In case of exporter, refund of excess input tax credit is allowed within 3 months from end of the quarter against filing application in Form VAT XXVI.

COMPULSORY ISSUE OF TAX INVOICE

Every registered dealer, having turnover of sales above an amount an amount specified shall issue to the purchaser serially numbered tax invoice with the prescribed particulars. This tax invoice will be signed and dated by the dealer or his regular employee, showing the required particulars. The dealer shall keep a counterfoil or duplicate of such tax invoice duly signed and dated. Failure to comply with the above will attract penalty.

ACCOUNTS TO BE MAINTAINED

VAT AUDIT

Every dealer whose gross turnover exceeds Rs. 1 crore in a year or input tax credit is more than Rs.10 lakhs in a year, his account books are required to be audited by a Chartered Accountant . Audited report in FORM VAT-XV should be submitted to the Appropriate Assessing Authority within 10 months from end of the relevant year. Failure attract penalty upto maximum of Rs. 1 lac.

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