RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

Vat is a modern and progressive form if sales tax.it is charged and collected by dealers
on price paid by the customer . Vat paid by dealers on their purchases is usually
available for set-off against Vat collected on sales.
Advantages of Vat
A) It is simple, progressive and transparent.
B) Remarkable rise in tax revenue for the government.
C) Reduction in number of tax rates.
D) Uniform rates of Vat all over the economy.
E) It has unique system of giving tax credits or set-off which is friendly for a tax
payer.It helps better tax compliance by the dealers.
F) No tax on tax or double taxation.
G) More reliance on self assessment and voluntary compliance by dealers.
H) The rate of VAT on export is zero and yet credit is given on tax paid on inputs.This
will encourage export promotion and will improve the balance of payments of the
country.
VAT applies to all types of business including
a) Importers
b) manufacturing
c) Distributors
d) Wholesalers
e) Retailers
f) works contractors.
How is VAT charged?
All registered dealers must charge VAT on their sale of taxable goods and collect it
from customers.They 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 claim a set-off[or deduction]
for the VAT paid to their suppliers.Dealer must see that the tax is charged
separately in their purchase invoice to claim set-off.
Rate of VAT :- They can be classified into four categories, under each of which a
different rate is describe1. As many as 46 items are exempt from VAT.These are natural and unprocessed
products in the unorganized sector and they have social
implications,e.g.foodgrains,pulses,milk,vegetables, books etc.
2. Special rate of 1% VAT is applicable to gold,silver,ornaments,precious metals and
stones.
3. Rate of 4% VAT is applicable to about 270 items.They are items of basic
necessities such as drugs and medicines.all agriculture and industrial
inputs,capital goods and declared goods.
4. The general rate of 12.5% VAT is applicable to all the remaining commodities.
The only exception to these rates is for the sale of motor spirits[i.e.petrol,diesel
etc.]which have special rates based on the existing BOMbay sales of Motor Spirit
Taxation Act,1958, subject to a floor rate of 20%.
25% for liquor
Set off/Input Tax credit:- Input tax credit means set off or deduction of input tax
by a registered dealer against the amount of his output tax.
Eg.
Material
Supplier
SP 1000
VAT @

Manufacturer
SP 1500
VAT @
10%=150

Wholesaler
SP 1800
VAT @
10%=180
1

Retailer
SP 2000
VAT @ 10%
=200

RELIABLE COMMERCE CLASSES

INDIRECT TAXES
10%=100

But VAT
payable
150-100=50

But VAT payable

180-150 =30

T.Y.B.COM
BUT VAT payable
200-180 =20

Income Tax
VAT
1. It is a direct tax
1. It is an indirect tax
2. It is controlled by Central Government
2. It is controlled by state
3. It arises on receipt or accrual of
Government
income.
3. It arises on sale of goods
4. It is charged on income arising in India
4. It is charged only on sale
or even outside India.
within the state.
5. It is levied on a person.
5. It is levied on goods.
6. It is paid by the assessee, it cannot be
6. It is recovered from the final
recovered from any other person.
consumer.
Definitions
1] Business sec.2(4):
Business incudes any service, any trade,commerce or manufacture or any
adventure or concern in the nature of service, trade, commerce or manufacture.
Motive behind such service,trade,commerce or manufacture is not important.
For the purpose of this definition
A] the activity of raising of man-made forest or rearing of plants is considered as
business.
B] any sale or purchase of capital asset relating to such service, trade, commerce
or manufacture is considered as business
C] Sale or purchase price of goods recorded in the profit and loss account of the
business , is considered for the purpose;
D] any transaction in connection with commencement or closure of business is
also considered as business.
The MVAT Act does not tax all sale of goods.It taxes the sale of goods in the
course of business only.Hence, definition of business is important in determining
the MVAT liability.
2] Dealer
sec.2(8):
Dealer means any person who is engaged in, or in connection with business
of buying or selling goods in the state whether for commission, remuneration or
otherwise.It includes
a) A factor, broker, commission agent or any other agent, who, for he purpose of
or engaged in or connected with buying and selling goods on behalf of
principal.
b) An auctioneer who sells or auctions goods, whether or not he has the
authority to sell goods for any principal.
c) A non resident dealer.[a dealer who effects purchases or sale in Maharashtra,
but who has no fixed place in Maharashtra.]
d) Any society, club or other association of persons which buys from or sells
goods to its members.For this purpose, each of the following persons, bodies
and entities are deemed to be a dealer, namely2

RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)

Customs department of the Government of India;

Departments of Union Government and State Government.
Incorporated or unincorporated societies, clubs etc.
Insurance and financial corporations, Banks etc
Local authorities;
Maharashtra state Road Transport corporation;
Port Trust.
Public Charitable Trusts;
Shipping and construction companies, airlines, advertisement agencies,
air transport companies.
x)
Any other corporation, company, body or authority under the control of
the Government or local authority.
Exceptions :
i)
An agriculture who sells agriculture produce grown on land cultivated
by him.
ii)
An educational institution carrying on the activity of buying and selling
goods.in the performance of its functions.
iii)
A transporter holding permit for transport vehicles i.e. hirer.
3) Importer Sec.2(13):
Importer means a dealer who brings any goods into the state from any place
outside the state. Only a dealer can be an importer. He may bring goods in
Maharashtra by way of purchase or otherwise. They may be brought by any Means
i.e. by road, rail, aeroplane, courier, post etc.
4) Manufacture Sec.2(15):
Manufacture includes producing, making, extracting, altering, ornamenting,
finishing or otherwise processing, treating or adapting any goods.
Manufacture implies a change but every change is not manufacture. The process
must be such that the final goods are commercially different from the original
goods.
The following tests can be applied, as laid down by various courts
A] there should be some process on goods.
B] Such process may be carried out by the dealer or any third person hired by the
dealer.
C] Such process must bring about changes in the substance of the original goods.
D] The Changes must result ito a commercially new nad different article.
Sr.
Activity
Is it
Reason
No
manufactur
e
1.
Assembly of Cycle or T.V.
YES
A new product with different
2.
Polishing of Furniture/gold
NO
No new product comes into
ornaments.
existence
3.
Repairing/reconditioning of No
machine
No new product comes into
4.
Cutting steel sheets into
NO
existence
smaller sheets.
3

RELIABLE COMMERCE CLASSES

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5.
6.
7.
8.
9.

Assembly of computer for

household use.
Retreading of old tyres.
Production of ball bearing
Labeling
Reconditioning of old tyres
or machines.

YES

T.Y.B.COM

No new product comes into

existence

No
YES
No
NO

A new product comes into

existence having different
properties.
No new product comes into
existence.
A new product comes into
existence
NO new product
No new product

5] Goods Sec.2(12):
Goods means every kind of movable property and it includes lilvestock, growing
crops, grass and trees including the produce thereof which ae agreed to be severed
before sale or under the contract of sale.
However, it excludes newspapers, auctionable claims, money , stocks , shares,
securities or lottery tickets.
Goods also includes the following intangible assets
a] patents b] Trademarks c] Import licence
d] Know-How
e] Goodwill
f]
copyrights
g] software packages h] Sim cards.
State whether following are Goods 1. Mechanical equipments, music system, chicken, vehicle, import
YE
licence,
S
Power loom, SIM card, Trees kulfi
2. Newspapers, Lottery tickets, doubtful claim, vacant land, shares in
NO
Ltd. Co.,
Flat used ofr business, Dollars
6] Sale sec. 2(24) :
It means a sale f gods made within the state for cash or for other valuable
consideration.It does not include a mortgage, hypothecation or pledge.
For the purpose of this clause
1. A sale within the state includes a sale determined to be inside the state as
per the principles of sec. 4 of the CST Act, 1956.
2. There should be the transfer of property in any goods for some consideration;
3. Such transfer of property in goods is as per the execution of work contract.
4. Terms of contract may be on hire purchase or in instalments.
5. Supply of goods by any association to its members for some valuable
consideration.
6. Supply of food, drinks etc. for human consumption, for some valuable
consideration.

RELIABLE COMMERCE CLASSES

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T.Y.B.COM

This definition helps to fix the liability under the Act because the tax is
charged on only those activities which are covered by the definition of sale.
Only a sale within Maharashtra is taxable under the Act.
Following are not sale as per court decisions
A] branch transfer
b] self consumption c] free replacement during warranty
period
D] distribution as free samples.
State whether following transactions are with reason
a) Transfer of goods from HO to
NO No transfer of ownership
b) branch
NO Excluded in definition
c) Pledge of goods
NO No consideration
d) Gift given to charitable institution YE Transfer of ownership for
e) Sale of car
S
consideration.
f) Sale of scrap
YE Transfer of ownership for
g) Sale on hire purchase basis
S
consideration.
h) Service charges received
YE Specifically included.
Exchange of mobile set
S
No goods involved.
NO Goods given for consideration.
YE
S
7] Sale Price sec.2(25) :
Sale price means the amount of consideration paid or payable to a dealer for any
sale made. Including any sum charged for anything done by the seller in respect of
the goods at the time of or before delivery of the goods.
Following points are important1. The amount of duties levied on goods under Central Excise Act, 1944 or the
customs Act. 1962 are part of the sale price of such goods.
2. Sale price shall not include tax paid or payable to a seller in respect of such
sale[MVAT].
3. Sale price shall include the amount of deposit received by the seller, by way
of a separate agreement, in connection with the said sale of goods.
4. The amount of consideration to a dealer for the sale of drugs specified in
entry 29 in schedule C, shall be the maximum retail price printed on the pack
containing the drug.
5. The cost of insurance for transit, the cost of installation when such cost is
separately charged, is excluded while calculating the sale price.
Total Sale Price
Total consideration

(+) Other charges

(+)Excise duty

(+) Custom Duty

(+) Related deposit

(-) Transit insurance

(-) Installation expenses

(-) MVAT

RELIABLE COMMERCE CLASSES

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T.Y.B.COM

Total Sale Price

e.g A product is sold at Rs.100 per unit. In a case, 200 units are sold. The octroi is
at Rs.2 per unit and excise is at Rs.10 per unit. The packing and forwarding
expenses are Rs.500. calculate sale price.
Computation of Sale Price
Consideration
20,000
(+) Octroi [200 units *2]
400
(+) Excise [200 units *10]
2,000
(+) Related packing expenses
500
22,900
Sale price
MVAT will be charged on this sale price of Rs.22,900.[and not on Rs.20,000]
8] Purchase Price Sec.2(20):
Purchase price means the amount of consideration paid or payable to a dealer for
any purchases made, including any aum charged for anything done by ht eseller in
respect of the goods, at the time of, or before delivery of the goods.
Following points are important
1. The amount of duties levied on goods under central excise Act.1944 or the
Customs Act,1962 are part of the purchase price of such goods.
2. Purchase price shall not include tax paid or payable by a person in respect of
such purchase.
3. Purchase price shall include the amount of deposit paid by the buyer, by way
of separate agreement, in connection with such purchase of goods.
9] RE- Sale Sec.2(22):
Resale means a sale of purchased goods1) In the same form in which they are purchased;
2) Without doing anything to them, which results in a manufacture.
Same form means without changing the shape, design, character of the
goods.
10] Service Sec.2(27):
Service means any service as may be notified by the State
Government.Basically, Services indicate use of labour and skill, not liable to MVAT,
which is tax on goods. Only those4 services notified by the Govt. are covered, so
that they can be taxed, in future, under MVAT.
11] Turnover of Sale Sec.2(33):
It means the total of the amounts of sale price received or receivable by a dealer
in respect of any sale of goods made during a given period after deducting
1. Sale price refunded by the seller, to a purchaser for any return, within the
prescribed period;
2. Deposit refunded by the seller, to a purchaser for any return, within the
prescribed period.

2 . MVAT:
REGISTRATION
6

RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

Every dealer, who satisfies the conditions given under the Act, is liable to pay tax,
with effect from the same day.His registration is compuslary from the same day.
Following points are important
1. Every dealer, whose total turnover of sale or purchases exceeds rupees Five
lakh,or an importer whose total turnover of sale or purchases exceeds
rupees one lakh, is liable to pay tax with effect from the day, in accordance
with the provisions of this Act.
2. A dealer who exceedthe relevant limits, be liable to pay tax under this
Actwith effect from the 1st day of April of the respective year. However no tax
is payable on sale from 1/4/05 upto the date on which limit is exceeded.
3. For the purpose of this section, the limits of turnover are as follows
1. Importer
Total turnover of sale
Total Taxable sale or Local
exceeds Rs.1,00,000
Taxable purchase exceeds
Rs.10,000.
2. Any other
Total Turnover of sale
Total Taxable sale or Local
person
exceeds Rs.5,00,000
Taxable purchase exceeds
Rs.10,000
4.
A dealer [Importer or any other person] who exceeds the limits and
fulfills both the conditions
During the year commencing from 1 st April, is liable to pay tax with effect
from the date on which
He exceeds limits for the first time. He has to make an application to the
Registration Authority in
The prescribed form within 30 days from the date the relevant limits
exceeds. A Specific
Registration No. is allotted to him. He will be known as Registered Dealer
under this Act.
5. The period from 1st April to the relevant date on which he exceede the
specified limit shall be called as,URD period i.e. period during which the
dealer was unregistered.
6. Turnover:- Total turnover shall include all sale taxable and tax free.It
shall include all sale made by dealer on his account and also sale by agent,
broker etc.,on his behalf. Sale of capital goods like machine, equipments etc,
shall also be included in the turnover of sale.
7. Voluntary Registration:- Any person who is not liable to pay tax under this
section but has date of effect of the certificate of registration.

RELIABLE COMMERCE CLASSES

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T.Y.B.COM

3.
MVAT : CALCULTAION OF TAX
LIABLITY
AND SET-OFF
Every dealer who is liable to pay tax under this Act, must pay it in accordance with
the provisions of this Act.
For the purpose of tax, all goods are divided in different schedules which are given
as underSchedu Particulars
Rate of Tax
le
A
Essential commodities such as milk, bread, books,
NIL
potato etc.
B
Gold, Silver, Pearls, precious stones
1%
C
Declared goods, industrial inputs and other specific
4%
goods.
A] Foreign liquor, Country liquor
20%
D
B] Motor Spirit, petrol, disel
Rate
specified
E
All other goods [not in Sch. A to D]
12.5%
Certain Sales and purchase not liable to Tax [sec.8]:
Section 8 deals with situation wherein sale or purchase which are not liable for
Tax. Under Maharashtra VAT, 2002. They are given as under
A] Sale or purchases outside the state [u/s 4 of The Central Sales Tax Act]
B] in the course of import of goods in india [u/s 5 of The Central Sales Tax Act]
C] In the course of export of goods outside India [u/s 5 of the Central Sales Tax
Act]
D] In the course of inter-state trade or commerce.
E] Sale of Air-Craft fuel.
F] Sale of goods by an Export oriented Unit[EOU] or by an unit in Special
Economic zone[SEZ] or by an unit in Electronic Hardware Technology Park
subject to the terms and conditions as may be prescribed.
G] The state government may provide exemption from payment of tax in
respect of any class or classes of sale of goods as a special incentive.

Composition of Tax [Sec.42] :

RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

Composition schemes are simple schemes providing simple procedure of tax

for the benefit of small dealers. It involves payment of tax amount in
lumpsum. It is an optional scheme for certain specific dealers.
Following classes of dealer can opt for the scheme
1. A retailer
2. A dealer running an eating house, hotel, restaurant, or a caterer who
serves food and non alcoholic drinks;
3. A works contractor[Rate of tax at 8%]
4. A dealer of running bakeries and second hand motor vehicles.
5. A dealer involved in the execution of construction contract[Rate of tax at
5%]
6. A dealer liable to pay tax on leasing of mandap, pendal etc. [Rate of tax at
1.5%]
For the purpose of this section, a retailer has been defined as a dealer if
9/10th or 90% of his turnover of sale is made to persons who are not
dealers i.e. final consumers.
However, the following dealers cannot opt for the scheme of
composition
1. A Manufacturer
2. An importer
3. A dealer who purchase any goods from Exempt Units i.e. interstate sale
or export sale or sale outside the state.
4. A dealer dealing in liquor.
Set-off ,Refund [sec.48]:
Set-off means reduction of tax paid on purchases from tax payable on
sale.set-off is the main feature of VAT. Refund means return of excess tax paid
by a dealer.
Set-off or refund can be claimed in respect of taxes paid under earlier law and
in respect or MVAT paid after 1/4/05. It is allowed only to a registered dealer.
Further, such dealer must be liable to pay tax under MVAT. Central sales Tax
[CST] on purchases from outside Maharashtra are not eligible for set-off.
Set-off on or After 1/4/2001. [Rule 52] :
Only a registered dealer can claim set-off on purchases from registered
dealer on or after 1/4/2005. Set-off can be claim of sales tax ona) Purchases of capital assets
b) trading goods
c)raw materials and
spare parts
d) Packing materials
e) fuel.
Double set off shall not be granted under this law.
Reduction in Set-off [rule 53]:
The set-off available under any rules shall be reduced or disallowed in part or
in full under following situations1. 3% of the purchase price of taxable goods used as fuel.
2. If the dealer manufacture any tax free goods[goods in schedule Awith Nil
rate of tax],then an amount equal to 2% of the purchase rice of
corresponding taxable goods purchased by him shall be reduced from the
amount of set-off, however, it is not applicable to purchases of capital
assets or used as fuel.
3. 2% of packing material used in resale of Tax free goods.

RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

4. 2% of stock transfer of taxable goods outside state, to its branch or

agent[not being a sale.]
5. 1% of stock transfer of sch.B goods to branch outside the state.[Precious
metals] if it is branch transferred, the dealer has to forgo set-off at 1% of
purchase price of gold used.
6. If the claimant dealer has opted for composition scheme for works contract
then, reduction in set off would be @ 36% of the amount of set off
available. i.e. he can claim only 64% of amt. of set-off.
7. No set-off is available if the business in which the dealer is engaged is
discontinued.
8. If sale receipts are less than 50% of gross receipts, set off shall be allowed
only on purchases corresponding to goods sold or transferred[and not on
total purchases.]
9. In case of liquor vendor, when actual sale price is less than M.R.P., then
set-off is re3duced as per the proportionate reduction- Amount of setoff/M.R.P.*S.P
10.The dealer shall claim only the balance amount as set-off after deducting
above amounts. If deduction is more than the set-off available. Then he
has to pay the difference.
Set off not admissible or not available [Rule 54]:
1. No set off on purchase of vehicles held as capital assets and any parts
thereof. However, this does not apply to goods vehicle or to a dealer doing
the business of hire or lease of vehicles.
2. No set-off on purchase of motor spirits.
3. No set-off on purchase of crude oil used by refinery for refining.
4. No set-off on purchase of assets or consumables used in job work or labour
work.
5. No set-off on any purchase of raw materials made by the dealer who holds an
Entitlement Certificate to claim tax exemption or reduction I tax.
6. No set-off on purchase of intangible asset.However, this does not apply to
import licence,exim scrips, software packages etc.
7. No set-off is available on works contract if the contract is executed for
immovable property.
8. No set-off for purchase of building material used in construction activity.
9. No set-off on purchase of office equipments, furniture and electrical
installation used as capital assets.
10.No set off is available on URD purchases.However, such purchases should be
considered for calculating reduction in set-off

MVAT 2002:
PROBLEMS

Discuss whether the following

dealers will be liable to pay tax (i.e. for Registration) under MVAT
Act,2002.
[A] When a dealer will be liable under MVAT Act.

10

RELIABLE COMMERCE CLASSES

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T.Y.B.COM

Q.1 (a) Mr. X who is a dealer (Importer) has purchased during the financial year
taxable goods worth Rs.36,000, tax free goods worth Rs.25,000 and imported
taxable goods worth.
Rs. 4,000 from outside Maharashtra. He sold goods worth Rs.3,10,000
(b) Mr. Y is a dealer (importer ) who has purchased during the financial year
taxable goods worth Rs.5,000, tax free goods worth Rs.25,000 and imported from
outside Maharashtra taxable goods worth Rs.9,000.He sold goods worth Rs.90,000.
(c) Mr. Z is a dealer (importer).He purchased during the financial year taxable
goods worth Rs. 7,000
And has imported tax free goods worth Rs.7,000.He sold goods with
Rs.7,00,000.
Q.2 1. Mr. P purchased taxable goods worth Rs.55,000 and value of goods sold by
him is Rs. 4,00,000.
2. Mr. Q purchased goods worth Rs.61,000 including Rs. 10,000 taxable ones.
He has manufactured
Goods worth Rs. 7,000. Value of goods sold by him is worth Rs. 6,00,000.
(3) Mr. R a dealer, purchased during the financial year a machinery worth Rs.
75,000 and other goods worth Rs. 40,000 including taxable goods worth Rs. 6,000.
He sold goods worth Rs. 4,00,000.
Q.3 The details of Purchases, sales and value of goods manufactured by Mr.
Hemant during the financial year are given below :
Particulars
Purchases
Sales
Value of goods manufactured
Taxable goods
24,000
5,44,000
9,000
Tax- free Goods
28,000
52,000
11,000
Total
52,000
5,96,000
20,000
Ascertain : Whether he is liable for payment of VAT ?
Q.4 The details of Purchases,
below:
Particular
Within State
s
of
Maharashtra
Rs.
Taxable
Goods
Tax free
Goods
Total

26,000
24,000

sales of Mr. Kiran during the financial year are given

Purchases
From Outside
State of
Maharashtra
Rs.
16,000
14,000

Sales
Total

42,00 52,000
0
50,000
38,00
0
50,000
30,000
80,00
1,02,00
0
0
Ascertain: Whether he is liable for payment of VAT?
Q.5 From the following information furnished to you by Mr. Careful regarding his
purchases and sales transactions, find out from which month he will be liable to pay
tax as per the provisions of the MVAT,2002, 1959.Give explanation for your answer.
11

RELIABLE COMMERCE CLASSES

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Month

April to
Nov.2010
Dec.10
Jan.11
Feb.11
March,11

T.Y.B.COM

Details of Purchases etc.

Tax
Free
Goods
40,000
60,000
20,000
40,000
70,000

Taxable
Goods

Raw Material &

Mfg. Exp.(prod.)

4,000
4,000
3,000
20,000

2,000
2,000
7,000
10,000

Details of sales
Tax
free
Goods
50,000
70,000
30,000
50,000
1,00,00
0

Taxabl
e
Goods
1,000
8,000
800
1,40,30
0
40,000

Q.6 Lalit is a dealer, determine from which month he is liable

MVAT,Act.02.
Month
Local Purchases
Purchase from
Gujarat
Taxable Tax Free
Taxable
Tax Free
May,10
June,10
Jule,10
August,10
September,
10
October,10

30,000
1,000
20,000
40,000
10,000
2,000

4,000
5,000
1,000
2,000
10,000
8,000

1,000
4,000
6,000
4,000
3,000
4,000

500
500
2,000
1,000
5,000
4,000

for registration under

Sales inside
State
Taxabl Tax
e
Free
15,000
5,000
20,000
4,000
10,000
2,000
5,000
5,000
22,000
8,000
40,000
5,000

Q.7 Mr. Amit is a trade and importer. From the following information find out on
which day he will be liable to pay tax as per the provision of the Bombay Sales Tax
Act, 1959.Give reason to your answer:
Date
Purchases Taxable Goods
Sale Taxable Goods
Within
Out of
Within Maharashtra
Maharashtra
Maharashtra
15.4.10
20.4.10
25.4.10
28.4.10
30.4.10
05.5.10
08.5.10

30,000
40,000
30,000

6,000
24,400
-

20,000
90,000
12

RELIABLE COMMERCE CLASSES

INDIRECT TAXES
20.5.10
31.5.10

20,000
-

T.Y.B.COM

40,000

Q.8 Mr. Lele commenced his business on 1st February, 2010.Find out from which
month he will liable for Registration and to pay tax as per the provisions of MVAT
Act,2002. Give Reasons of your answer.The details of his sales & Purchases are as
under :
Year & Month
Purchases (Local)
Sales (Local)
Taxable
Tax Free Goods Taxable
Tax Free
Goods Rs.
Rs.
Goods Rs.
Goods Rs.
Feb., 2010
8,000
50,000
4,000
95,000
Mar.,2010
3,000
32,000
5,000
45,000
April.,2010
4,000
2,10,000
1,000
3,05,000
May.,2010
5,000
1,75,000
6,000
1,90,000
June.,2010
2,000
2,00,000
2,000
2,10,000
July.,2010
4,000
2,50,000
5,000
2,75,000
Aug.,2010
4,000
1,70,000
4,000
1,90,000
Sept.,2010
6,000
1,80,000
8,000
2,20,000
Q.9 Dilip Enterprises is a dealer, find out from which month he will be liable for
registration as per the provisions of MVAT , Act 2002:
2010 Month
Purchases
Sales
Taxable Rs.
Tax Free
Taxable Rs. Tax Free
Rs.
Rs.
April
500
2,500
500
1,000
May
1,000
4,500
500
3,000
June
2,000
6,500
1,500
10,000
July
2,500
24,000
2,000
26,000
August
3,000
25,000
4,000
28,000
September
3,500
52,000
1,000
65,000
October
4,500
72,000
2,500
75,000
November
6,000
25,000
4,500
26,000
December
4,500
80,000
6,000
2,92,000
Q.10. Mr. Gadgil commenced his business as manufacturer on 1 st February, 2010.
From the following particulars regarding purchases and sales transactions, find out
from which month he will be liable for registration and to paytax as per the
provisions of MVAT Act, 2002. Give Reasons.
2010 Month Details of Purchases
Details of Sales
Out of
Within State
State
Taxable
Taxable Tax Free
Taxable
Tax Free
RS.
Rs.
Rs.
Rs.
Rs.
Feb.
8,000
28,000
16,000
40,000
20,000
March
1,000
20,000
15,000
23,000
16,000
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INDIRECT TAXES
April
May
June
July
August

5,000
4,000
3,000
6,000
8,000

8,000
20,000
15,000
12,000
16,000

28,000
18,000
24,000
26,000
14,000

18,000
26,000
20,000
24,000
12,000

T.Y.B.COM
24,000
18,000
16,000
28,000
16,000

Q.11 Mr. Anan is a new dealer. Find out from which month he will be liable for
registration as per the Provisions of the MVAT Act, 2002. Give Reasons
Month year 10
Purchases
Sales
Taxable
Tax Free
Taxable
Tax Free
Rs.
Rs.
Rs.
Rs.
April to June
July
August
September
October
November
December

3,500
2,500
3,500
3,000
4,500
6,000
9,000

13,500
24,000
52,000
25,000
72,000
2,25,000
75,000

2,500
2,000
1,000
4,000
2,500
4,500
7,000

14,000
26,000
65,000
28,000
75,000
3,26,000
84,000

[B] Calculation of MVAT Liability:

Q.1 Mr. Jayasuriya, a registered dealer gives you the details of sales for the month
of Dec.,2010 as
Follows:
Particulars
Rs.
1. Sale of goods covered by sch. A
4,00,000
2. Sale of Goods covered by sch. B
2,00,000
3. OMS sales against form C @ 4% CST
1,50,000
4. Sale of schedule E goods
1,00,000
Compute the Vat liability for the month of Dec.,2010
Q.2 Mr. A registered dealer gives you information on sales as detailed below :
Period
O.M.S
Taxable sale (Net)
Quarter ending Jun.,2010
13,00,000
55,000
Quarter ending sept.,2010
6,00,000
1,00,000
Quarter ending Dec.,2010
10,50,000
1,00,000
January 2011
75,000
2,00,000
February 2011
1,00,000
3,50,000
March 2011
50,000
2,00,000
Ascertain tax liability is respect of above periods under the MVAt Act.
Q.3 Mr. A of Pune started business from 1st April,2010. From the following
information,compute his total tax liability under the MVat Act.
Particulars
Rs.
Schedule A goods
6,00,000
Schedule C goods
80,000
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RELIABLE COMMERCE CLASSES

INDIRECT TAXES
Schedule D goods @20%
Schedule Egoods

T.Y.B.COM
60,000
80,000

Q.4 A dealer request you to compute his tax liability under MVAT Act, 2002 for
march, 2011 from the following information.
Particulars
Rs.
Sales (tax rate 20% as per schedule D)
35,000
Sales out of Maharashtra including CST
36,000
Sales (schedule C)
72,000
Labour charges
1,10,000
Schedule A goods
6,32,000
8,85,000
Total
Sales return within 6 months of Schedule D goods having tax rate 20%
5000
Q.5 A dealer request you to compute his tax liability under MVAT Act, 2002, for the
month of May, 2010 from the following information.
Total sales of schedule E goods
65,000
Sales out of Maharshtra
25,000
Sales (Schedule C goods)
30,000
Labour charges
1,00,000
Schedule A goods
5,20,000
Schedule B goods (net)
30,000
Net sales return, within 6 months, of schedule E goods Rs.10,000.
Q.6 M/S. Yogesh and Co., request you to compute liability under MVat Act, 2002 for
the month of Jan.,2011 from the following information. M/s Yogesh & Co. is
registered dealer under MVAT Act,2002.
Particulars
Rs.
Sale of schedule A goods
4,00,000
Sale of Schedule C goods
2,00,000
Sale of schedule Egoods
5,00,000
Sale out of Maharashtra
10,00,000
Labour charges received
4,00,000
Less:sale return (within 6 months) of:
Schedule Agoods
20,000
Schedule Egoods
50,000
M/s Yogesh & Co. is entitled to set-off of Rs.36,500 b/f from previous month. Sales
figures are exclusice of MVAT.
Q.7 M/s Patel& co., provides you the following information regarding MVAT Liablity
for the month of January,2011
Particulars
Rs.
1. Sales of schedule A goods
33,00,000
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RELIABLE COMMERCE CLASSES

INDIRECT TAXES
2.
3.
4.
5.
6.

T.Y.B.COM

Sales of schedule B goods

Sales of schedule C goods (manufactured)
Sales of schedule E goods
Labour charges recovered
OMS sales
Sales return on schedule A Goods
Sales return of schedule B Goods
Sale return of schedule C(including previous monthy)
The company is entitled to set-off Rs.2,70,000.

18,00,000
21,96,000
36,00,000
8,00,000
6,40,000
3,00,000
5,00,000
2,00,000

Q.8 From the following information in respect of Schedule E goods.You are required
to find out total amount of VAT for the below mentioned month.
Months
Taxable sales Rs.
April 2010 to January 2011
4,00,000
February 2011
4,00,000
March 2011
4,00,000
Q.9 Calculate Net Tax payable under MVAT from the following particulars for
April,2010:
Particulars
Rs.
Price of Goods Purchased
10,00,000
Sale price
18,00,000
Q.10 calculate net Tax Payable under MVAt from the following particulars for
April,2010:
Particulars
Rs.
Raw material X purchased [schedule E]
10,00,000
Raw material Y purchased[schedule C]
2,50,000
Sale price of goods
40,00,000
Q.11 Calculate tax payable under MVAT Act, from the following details for jun,2010
Particulars
Rs.
Local Purchase
10,00,000
Purchase from Gujarat @ 4%
3,00,000
Purchase from URD
1,00,000
Sale price of goods
12,00,000
Q.12 Calculate tax payable under MVAt Act, from the following details for
may,2010 :
Particulars
Rs.
Purchase price of inputs
10,00,000
Sale price of Goods, Manufactured & sold
15,00,000
Q.13(a) A dealer purchases the following goods in Maharashtra during the month of
March 2011 :
Particulars
Total Rs.
Input Tax paid Rs.
Net Amount Rs.
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RELIABLE COMMERCE CLASSES

INDIRECT TAXES

T.Y.B.COM

4% VAT goods
10,40,000
40,000
10,00,000
12.5% Vat Goods
9,00,000
1,00,000
8,00,000
VAT Exempt Goods
2,00,000
2,00,000
21,40,000
1,40,000
20,00,000
Total
(b) The input tax paid on purchase of goods is eligible for VAT credit (set-off).
(c) Sales made by the dealer during the month are as below:
Particulars
Gross amount
Output tax collected
Net sale price
4% VAT Goods
11,44,000
44,000
11,00,000
12.5% Vat Goods
10,12,500
1,12,500
9,00,000
VAT exempt Goods
2,50,000
2,50,000
24,06,500
156,500
22,50,000
Total
Prepare the statement of computation of tax to be attached with the MVAT returns.
Q.14 The raw material required to manufacture a product Z is procured as follows:
Particulars of R.M.
Amount (Ex. Tax)
Schedule
Raw Mat.: I
50,000
C
II
90,000
E
III
12,000
A
The above raw material was purchased from a registered Dealer within the state.
The product Z was sold for Rs. 2,00,000 which is covered by Schedule E.you are
required to find out the VAT payable by the assessee.
Q.15 Mr. Prashant a registered Dealer Manufactures a product covered under
Schedule E. the same is sold at Rs. 5,00,000. Raw material required to manufacture
the above product is procured from a registered dealer within the state.
Particulars of R.M.
Amount (Ex. Tax)
Schedule
Raw mat.: M
1,25,000
C
N
2,25,000
E
You are required to find out Value Added Tax payable under the Act..
Q.17 Mr. Vishal is a dealer. His sales during the first quarter of 2010-11(april to
June) are as under :
Date
invoice no.
Amount Rs.
1. 05-4-2010
103/FCA/01/2010
10,000 plus MVAt @ 4%
2. 12-4-2010
103/FCA/02/2010
80,000 plus MVAT @ 4%
3. 05-5-2010
103/FCA/03/2010
62,400(inclusive of MVAt
@4%)
4. 27-6-2010
103/FCA/04/2010
14,000 plus MVAt @ 4%
5. 27-6-2010
103/FCA/05/2010
18,000 plus MVAT @ 4%
6. Goods worth Rs. 7,000(exclusive of tax) against invoice No.103/FCA/04/2010
were returned on 29-6-2010.
All the above sales were made in Maharashtra. Calculate the turnover and Vat
payable if the rate of tax is 4%.
Q.18 M/s Phutane & Co.,furnishes the following data, you are required to compute
the amount payable as tax under, MVAt Act 2002.
Month
sales
Purchase
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INDIRECT TAXES

T.Y.B.COM

Sch.A
Sch.C
Sch.E
Sch.E
Oct.2010
1,00,000
4,00,000
3,20,000
4,00,000
Nov.2010
2,00,000
4,25,000
4,10,000
4,50,000
Dec.2010
2,50,000
6,00,000
2,20,000
5,50,000
There was an opening balance of Rs.2500/- in the VAT credit Receivable Account
on1-10-2010

18